Homevest allows you to easily request and compare mortgage offers from leading banks
Homevest allows you to easily request and compare mortgage offers from leading banks

Fixed-rate vs. variable rate mortgages in Spain: the full comparison for non-residents

In the last quarter of 2023, mortgage rates went up, with small tweaks in fixed rates and increases in variable rates as the year ended. Continue reading our comparison of fixed-rate vs. variable rate mortgages in Spain, including their pros, cons, and opportunities compared.

Delia Mihuț
Written by Delia Mihuț
Published at 2024-01-29T09:09:07Z
Last updated at 2024-02-13T08:15:05Z
Readtime 4 minutes

If you're currently in the process of securing a Spanish mortgage, you're likely aware that the choice of interest rates for your loan has advantages and disadvantages.

The two most common options in Spain are fixed and variable mortgage rates. But which is the best?

Read on for a helpful comparison of the two, looking at pros, cons, limits, and more. We'll introduce you to a fantastic alternative for requesting and comparing mortgage offers from leading Spanish banks — Homevest, the digital mortgage broker that simplifies getting a mortgage abroad.

But for now, let's dive right into comparing fixed-rate vs. variable rate mortgages for non-residents.

What is a fixed-rate mortgage?

A fixed-rate mortgage is a loan that maintains a consistent interest rate for the entire duration, ensuring steady, unchanging monthly payments.

Over the past three months, Sabadell had the best fixed interest rate of all Spanish banks, at 3.53%.

Pros and cons of a fixed-rate mortgage in Spain

Pros
  • a cheaper option 
  • payment predictability: consistent monthly payments over the loan term
  • protection from economic changes
  • reduced financial stress thanks to stable payments
Cons
  • early redemption fee: banks can charge a redemption fee of up to 2% if you switch from a fixed-rate mortgage in the future
  • limited flexibility: not adaptable to market rate reductions
  • the duration of the mortgage is typically shorter compared to variable mortgages (20 years vs. 30 years)

What is a variable rate mortgage?

A variable rate mortgage is a loan with an interest rate fluctuating with market conditions over time.

Despite the EURIBOR decreasing, Spanish banks raised their spreads on variable rate mortgages in the past three months. As a result, the best variable rate mortgage currently stands at 5.46%.

Pros and cons of a variable rate mortgage in Spain

Pros
  • flexible 20-30 years repayment options
  • possible lower payments if rates fall
  • lower prepayment penalties compared to fixed-rate mortgages
Cons
  • payments may go up if interest rates rise
  • uncertainty due to the possibility of monthly payment fluctuations

Fixed-rate vs. variable rate mortgages in Spain

Here’s a quick look at how a fixed-rate and a variable rate mortgage in Spain stack up against each other:

  Fixed-rate mortgage Variable rate mortgage
Availability  Most Spanish banks offer this type of loan, including Sabadell, Caixa, Unicaja, UCI, Cajasur, BBVA Most Spanish banks offer this type of loan, including Sabadell, Caixa, Unicaja, UCI, Cajasur, Santander
Rate adjustment period Not applicable as the rate does not change The interest rate is adjusted annually or every 6 months, depending on the bank
Historically performance In 2023, fixed-rate mortgages have been cheaper, with banks pricing them lower in anticipation of a general decline in interest rates over the longer term.

Variable-rate mortgages have been less expensive in terms of initial interest rates, reflecting the higher risk the borrower assumes. 

Variable mortgage rates, which are indexed to the EURIBOR, might fall in Q1 in anticipation of the European Central Bank reducing its rates in Q2, offering potential savings on interest for borrowers

Best interest rate in the last three months* 2,75%  4,30%
Limits Bankinter and BBVA offer fixed-rate mortgages exclusively to applicants with income in euros  BBVA provides variable mortgages exclusively to applicants with income in euros
Fees

Early redemption up to 2%

Depending on the customer profile, there may be a 0-1.5% opening fee. 

Additional costs:

  • Valuation
  • Notary
  • Insurance
  • Registry verification

Depending on the customer profile, there may be a 0-1.5% opening fee. 

Additional costs:

  • Valuation
  • Notary
  • Insurance
  • Registry verification
Loan term options approximately 20 years ranging from 20 to 30 years

* Homevest evaluated the bank’s offers for its clients, calculating the average effective interest rates over the past three months. 

The effective interest rate approximates the annualized interest rate of a loan offer, considering the loan duration and initial promotional interest rate periods.

In the last quarter of 2023, mortgage rates fluctuated, with fixed rates undergoing slight adjustments and variable rates experiencing significant shifts towards year-end.

Month Fixed-rate mortgage Variable rate mortgage
October 2023 4.50% 5.90%
November 2023 4.65% 5.76%
December 2023 4.92% 5.99%

Homevest makes the banks compete for you

Homevest makes it possible for you to request and compare mortgage offers from the top Spanish banks. By choosing Homevest as your mortgage broker, you'll benefit from priority services offered by the banks, ensuring that you secure your mortgage in time for the property signing.

Homevest not only makes the banks compete for your case, but can also handle the entire mortgage process for you.

So, which is better, a fixed or variable-rate mortgage?

It all depends on what you're looking for: financial safety and predictability or flexibility and the potential for lower payments. If you're unsure about these options, a mixed mortgage might be the solution, offering the advantages of both fixed and variable rates.

After reading this guide, you should have a better idea of what suits your needs between fixed and variable mortgages, allowing you to choose the best option for your financial situation. Homevest can make the process easy for you, regardless of your choice. 

Sources used and checked in January 2024:

  1. Banco de Espana

We recommend obtaining professional or specialist advice before taking or refraining from any action based on the content in this article. The information in this article does not constitute legal, tax, or other professional advice from Homevest Limited. Prior results do not guarantee a similar outcome. We make no representations, warranties, or guarantees, whether express or implied, that the content in this article is accurate, complete, or up to date.

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