2023-10-15 16:41:15
If you are considering a variable rate mortgage, one of the most crucial decisions is the interest rate review period. Some banks offer semi-annual reviews, while others opt for annual reviews. Here we explain how each option could affect your monthly payments and which one might be best for you.
How does the variable interest rate work?
The interest rate of a variable mortgage is determined by adding the Euribor to a specific differential. This calculation is done at the beginning of the mortgage and is repeated at regular intervals, usually every six months or annually.
What does the review mean?
During the review period, the current status of the Euribor is verified. If it has increased since the last review, your monthly payment will increase; If it has decreased, your quota will go down.
Why opt for a semi-annual review?
If the Euribor shows a downward trend, a semi-annual review could benefit you, since your quota will be adjusted downwards more often.
And an annual review? If the Euribor is rising, an annual review could be more advantageous, as it would delay any increase in your monthly payment. Which is better?
Choosing between a semi-annual or annual review is ultimately a personal decision. Some people prefer the predictability of an annual review to better manage their budget, since it allows them to know how much they will pay during the next year without surprises, in any case it is still something purely anecdotal since the Euribor usually has very long trends, both upwards as well as downwards, so on average you will end up paying practically the same whether you review it after one year or after six months.
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