Home loans can be granted with variable, fixed or mixed interest rates.

If it is variable, the interest rate changes over the life of the loan whenever the value of the reference rate is revised (for example: every 3 months, if Euribor is 3 months, or every 6 months if Euribor is 6 months), because the value of the reference rate can increase or decrease over time due to factors unrelated to the loan.

If the interest rate is fixed, customers know what the interest rate will be until the end of the loan term. When the loan agreement is entered into, it is normal for the fixed interest rate to be higher than the variable interest rate, since the term it refers to is much shorter.

In the case of a mixed interest rate loan agreement, there is a period when the rate is fixed, followed by another period in which the rate is variable.

Only at the end of the loan will customers know what would have been the best option at the time they signed the agreement. The choice between one of the options depends on customers’ expectations regarding the future evolution of the interest rates and the charges that they want to take on in the immediate future.

In the scope of offering credit agreements for the purchase or construction of permanent owner-occupied dwellings, institutions must provide the customer with simulations of the credit agreement’s terms and conditions using fixed, mixed and variable interest rate arrangements. After the customer chooses the interest rate, institutions must make a credit agreement proposal.