The year could not have started worse for those with an adjustable mortgage. The Euribor, which is the index with which the interest on these products is calculated, closed January above 3%, traded at around 3.5% in February and will exceed 4% in March, if forecasts are met. For those mortgaged at a variable rate, in an average mortgage that will mean paying an average of about 300 euros more each month as soon as their interest is updated, which represents about 3,500 euros more per year.
This significant increase in cost will significantly worsen the economic situation of many families with variable-rate mortgages, since they will have less money to meet the expenses of daily life. Vulnerable households will also find it more difficult to make ends meet and, in some cases, will not be able to pay the new installment on their mortgage, which will expose them to the possibility of losing their home.
However, although this situation does not invite optimism, there are ways to soften the economic impact caused by the rise in mortgage payments. According to the financial comparator HelpMyCash, those with variable-rate mortgages can take several actions to reduce their mortgage payment, although it is important that they act as quickly as possible.
First of all, the variable rate mortgaged person must calculate if they will be able to assume the increase in their quota. The calculation is very simple: if the monthly payment of the mortgage, together with that of the other credits that you have in force, does not exceed 35% of your net monthly income or of the joint income of all the holders, you will be able to face it without too many problems. On the other hand, if that percentage is exceeded, the client could have serious problems making ends meet.
For example, suppose that a family has a variable mortgage whose installment has risen to 800 euros after reviewing the latest Euribor values. If your net monthly income is 3,000 euros, you will be able to assume the new monthly payment without problems, since you will only need 27% of your salary to pay it. On the other hand, if the salaries of its members add up to 2,000 euros, this family will have to dedicate 40% of their earnings to face the mortgage, which will place them in a risky situation.
According to HelpMyCash, this calculation can also be done by clients whose variable mortgage has not yet been reviewed. In this way, they will be able to look for solutions in advance in case they cannot assume their new fee or do not want to pay more than necessary. To find out in advance what the amount of the monthly payments will be, you can make an appointment with the bank so that a manager can simulate various scenarios or you can use online tools such as the free mortgage review simulator offered by this financial comparator.
In the event that the mortgaged person can assume the increase in his monthly payment without too many problems, he has the option of paying it as usual. Now, if this circumstance occurs, the comparator analysts assure that several actions can be carried out to reduce the fee and pay less in interest.
For example, if the client has money saved that he does not plan to use for investments or for emergencies, he can use it to pay off his mortgage early in whole or in part. In the first case, you can get rid of your debt forever, while in the second, you can decide between reducing the amount of your installments or shortening the repayment term to pay off the loan earlier and save the interest that would be generated during the shortened years .
When enjoying a good economic situation, these clients can also try to modify the interest rate of their variable mortgage: change it to a competitive fixed rate to stop worrying about the Euribor, change to a mixed interest rate to pay a stable installment for a few years or reduce your differential (which is added to the Euribor) to reduce your monthly payment. On the HelpMyCash website you can check which operations allow you to carry out these refinancings and how much they cost.
And what can a family do if the new mortgage payment is out of their budget? In this case, from the comparator they advise making an appointment with the bank as soon as possible to expose the situation and try to agree on solutions that allow the monthly payment to be reduced: extend the term, negotiate a period during which you do not have to pay installments or only have to pay one part (a total or partial lack).
Banks, as a general rule, are interested in their clients paying their mortgages, so they are usually open to negotiations if there have not yet been any defaults. In addition, if certain circumstances are met, they are obliged to offer the aid for mortgagees approved by the Government of Spain at the end of last year, which includes the extension of the loan term, the application of a grace period and the reduction of the interest rate.
In this sense, from HelpMyCash they have launched an aid simulator for mortgages that allows you to know if the requirements are met to benefit from the Government measures. This tool also shows what solutions the bank should offer if eligible, how much the fees will be reduced as soon as they are applied and what the cost associated with the modifications will be.
