Choosing the interest rate type is one of the most important decisions when you take out a mortgage, because it sets how much you will pay each month and how much you will pay in total over decades.
How a mortgage works
With a mortgage you repay the loan in monthly instalments (equal ones if the rate is fixed) that include a part of capital and a part of interest. At the start most of each payment is interest; over the years the share that repays capital grows.
For example, a loan of 150,000 euros at 3% over 25 years has a payment of 711.32 euros a month. In total you would pay 213,395 euros, of which 63,395 is interest.
The three types of mortgage
| Fixed | Variable | Mixed | |
|---|---|---|---|
| Interest rate | The same for the whole term | Changes at each review | Fixed for the first years and variable afterwards |
| Payment | Predictable | Can go up or down | Stable at first, variable afterwards |
| Risk of rates rising | The bank takes it | You take it | You take it after the fixed period |
| If rates fall | You do not benefit, unless you renegotiate | You benefit | You benefit after the fixed period |
Fixed-rate mortgage
You know from day one how much you will pay, which makes budgeting easier. In exchange, you do not benefit if rates fall, unless you renegotiate or switch banks.
Variable-rate mortgage
The rate is a reference index, usually the 12-month Euribor, plus a margin set by the bank. It is reviewed periodically, so the payment can go up or down. Always check the current value of the index, because it changes every month.
Mixed-rate mortgage
It combines both: an initial period with a fixed rate, lasting several years, and then a variable rate. It can suit you if you want stability at the beginning, but you must be ready for the variable phase.
How much the payment changes if the rate changes
With 150,000 euros over 25 years, this is what would happen depending on the interest rate:
| Interest rate (TIN) | Monthly payment | Total interest |
|---|---|---|
| 2% | €635.78 | €40,734 |
| 3% | €711.32 | €63,395 |
| 4% | €791.76 | €87,527 |
| 5% | €876.89 | €113,066 |
Going from 3% to 5% means more than 165 euros extra a month. Before choosing a variable-rate mortgage, check whether your budget could withstand a rise like that.
TIN and TAE: they are not the same
- The TIN (nominal interest rate) only measures the cost of the interest.
- The TAE (the Spanish equivalent of an APR) also includes compulsory fees and costs, so it is better for comparing offers.
Discounts that reduce the rate usually require you to take out insurance, move your payroll to the bank or hold a card. Work out the real cost of that tie-in before deciding.
Simulate your payment
Type in the loan amount, the interest rate and the term:
The calculator uses the French amortisation system (constant payment) and does not include fees, insurance or costs. For other tools, visit the calculators page.
Which one should you choose?
There is no single answer. It depends on your tolerance for risk, the stability of your income and the margin in your budget. As a common reference, it is recommended that all your debt repayments together should not exceed around one third of your net income.
Before you sign, review the costs of a mortgage and the most common mistakes when taking one out.
Frequently asked questions
Which mortgage type is cheapest?
It depends on the offers at the time you apply and on where interest rates go afterwards. Compare the TAE and the total cost of each offer, not only the first payments.
Can I change from variable to fixed later?
In some cases you can, by renegotiating with your bank or by moving the mortgage to another bank, but fees and conditions apply. Check them before you decide.
Does this apply if I am not Spanish?
Yes. Non-resident buyers and foreign residents take out the same types of mortgage, although banks may ask for more guarantees or lend a smaller share of the price to non-residents. Ask each bank for its conditions in writing.
This article is for information and education only. It is not personalised financial, tax or legal advice: for an important decision, consult a qualified professional. Last reviewed: October 2026.