When taking out credit on the market, regardless of its type, you will have to bear the interest rates. In the case of housing credit, there are 3 types of rates, which can be fixed, variable or mixed.

In fact, their choice makes all the difference to your future, as it defines how the installments will be paid. Want to know how each of these rates works? So keep reading and find out all the details.

The first of the types of home loan rates we brought corresponds to the variable modality. As its name suggests, it changes throughout the contract.

In other words, at the time of contracting you will have to pay a fee of X percent on the installments and the total contracted amount. 

However, there is no guarantee that this percentage will remain throughout the entire mortgage loan payment. 

Therefore, you may pay a rate today that will be higher or lower in the future. In this regard, it is worth highlighting that since 2015 these rates have tended not to rise.

When you choose a variable rate home loan contract, it will be made up of two factors:

The spread tends to be fixed, while what will change in the interest rate paid will correspond to variations in the Euribor. It can be reviewed quarterly, semi-annually, etc.

Therefore, the rise or fall of interest rates will always depend on changes in the index rate, which is Euribor. In fact, know that in addition to these rates having been falling since 2015, experts do not foresee them going up anytime soon.

However, for scenarios in which payment will take place over 3 or 4 decades, more care must be taken, as it is not possible to make accurate long-term predictions.

In other words, in these cases it is not possible to guarantee that the Euribor rate will not rise throughout the payment of the housing credit contract. Finally, know that today more than 90% of housing loans in Portugal are indexed to Euribor. 

See its main advantages:

Continuing with the types of home loan rates, we have the fixed rate, which works completely opposite to how variable rates work.

As the name suggests, here we are facing fixed interest rates. That is, they do not change throughout the repayment of the loan. They are the same from the first to the last payment.

Unlike variable rates, fixed interest rates are set by the bank that grants the loan.

To do this, the institution takes into account a series of information that varies according to each contract. After all, they arise from each consumer. Among them are:

The advantages of this type of rates are:

Finally, know that there is also a way to combine the two types of home loan rates above. In this case, these are mixed or variable rates.

In this modality, the first installments (with a term to be defined in the contract) are paid based on a fixed rate. After this period, mixed rates come into play, replacing fixed rates.

Not by chance, this is an option that is often chosen in times of economic crisis or political uncertainty. After all, here it is possible that there is, at the beginning, certainty about the values of the installments.

Then, the possibility of taking advantage of a reduced Euribor rate opens up, should it fall. So, find out about the advantages of the mixed rate:

Yes, Banco de Portugal allows this renegotiation of rates even if the contract is already in force. To do this, however, both parties must agree.

One of the ways to change the interest rate is by transferring credit to another institution that has better payment conditions.

Or, by purchasing additional products from the banking institution with which the credit agreement was made. In this case, it is possible that there will be bonuses on other products.

It's hard to know which one is best, right? However, be aware that while in some scenarios one of the rates is more pleasant, in others the others may prevail.

For example, under normal market conditions it is common for the fixed rate to be higher than the Euribor rate. In other words, have higher payments.

However, note that in this case the consumer does not suffer from the risk of an increase in applicable interest rates. On the other hand, you will also not benefit from a possible fall in Euribor.

Therefore, all installments have advantages and disadvantages that must be considered by the customer.

At the same time, it is necessary to remember that they all vary according to the value of the property and the profile of the client, as well as the granting of credit guarantees.

Finally, now that you know about the types of rates for this line of credit, how about starting to look for the ideal home loan? Read below for more information about the CTT bank option!