In June We Said Your Mortgage Letter Would Get Worse. It Has, but Fixing an Older Loan Carries No Penalty.

With interest rates growing daily, we found some good news. On the Costa del Sol, an older variable mortgage can mean a higher autumn bill and a cheaper route to fixed payments.

For home loans covered by Spain's mortgage law, changing from variable to fixed through your bank or a transfer carries no early-repayment charge after year three. You still need an offer and a price for the other costs.

The European Central Bank raised interest rates by a quarter of a percentage point on Thursday, 10 September. The new rates take effect on 16 September. It has not committed to its next move. Confirmed September 2026.

Your bank will still calculate your payment from the terms of your mortgage.

A variable mortgage has a review date. You will find it in your escritura — mortgage deed, together with the rule for choosing the interest rate. Reviews are often annual, although some loans change more frequently.

For a mortgage using the official monthly Euribor, the bank takes the average for the month specified in that rule. Euribor is the benchmark rate; the bank adds the margin you agreed when you borrowed.

The Bank of Spain says the reference month is usually one or two months before the review. A September review might therefore use July or August. Your deed determines which.

August's official average was 2.954%, published on 2 September. A daily figure in the headlines does not replace that monthly average in this kind of mortgage.

The bank's letter should tell you the new payment. With the right reference month, balance and remaining term, you can check the calculation yourself.

Take €150,000 still owed, with 25 years left, and a bank margin of one percentage point above Euribor.

Using August's average, the interest rate rises from 3.114% at last year's review to 3.954% at this year's. Our calculation puts the monthly payment at €787.95, up from €720.24.

That is €67.71 more a month, about €812 over a year. The calculation covers interest and repayment of the loan, excluding insurance and fees. Your own balance, remaining term and margin will change the result.

This August-to-August calculation uses figures published before yesterday's ECB decision.

Set that against 2023. Holding the same balance, term and margin constant, an annual review using October 2023's index would have added €129.57 a month. This example's increase is roughly half that size.

These are comparable calculations, not the history of one actual loan. A borrower paying since 2023 would have reduced their balance and have fewer years left.

The Bank of Spain's instalment calculator takes your outstanding balance, remaining term and full interest rate. For this example, enter 3.954%: August's 2.954% plus the one-point bank margin.

Across Spain, variable-rate borrowing accounted for about 43% of banks' outstanding mortgage debt at the end of 2025, down from roughly 75% in 2017, according to the Spanish Mortgage Association. Those figures measure national debt balances, not Costa households.

For someone still on a variable rate, their own loan's age matters more than that national share.

Under article 23.6 of Spain's mortgage law, a qualifying change to a fixed interest rate can happen by agreement with your bank or by transferring the mortgage to another lender. After the loan's third year, the early-repayment compensation for that conversion is zero.

During the first three years, the ceiling is 0.05% of the amount repaid early, and no more than the lender's financial loss. The conversion protection can apply to older contracts too. Cancelling a mortgage and taking out a fresh loan is a different route.

In our 16 June issue, we called that ceiling 0.15% and marked it verified. We were wrong: it had been 0.05% since November 2022. We made the charge look higher than it was.

A zero conversion charge still leaves other costs to check. CaixaBank's Spanish mortgage-transfer example includes a €254.10 valuation paid by the borrower. That is an example, not a quote for your property.

The bank's purchase advertisement is not your transfer offer either. Ask for the price of changing your existing loan, including any insurance, account charges and conditions attached to the lower rate.

Compare offers over the same remaining term. Stretching the loan can reduce the monthly payment while increasing the interest paid overall.

Your current bank can offer new terms, but a matching offer alone does not bind you. The new lender still has to accept you. Without that charge the comparison is cleaner, though approval and the final price are still the lender's to give.

Two questions for the person handling the bank conversation.

¿Qué euríbor se aplica en mi revisión y de qué mes? — Which Euribor applies at my review, and from which month?

¿Me pueden dar por escrito el coste total de pasar a tipo fijo? — Can you give me the total cost of changing to a fixed rate in writing?

An older variable mortgage can bring a higher payment and a useful right to change terms without early-repayment compensation. Your next review date, the bank's calculation and a written offer will tell you what that right is worth to your household.

Enjoy the weekend — A. and the WaypointSur team, checking our bank's homework.