High Spread? Will renegotiating my Spread reduce my monthly instalments?
Many families are facing the challenge of ever-increasing mortgage instalments. The European Central Bank (ECB) raised interest rates, which in turn sent Euribor rates soaring. However, there is a light at the end of the tunnel: the average spread on new variable-rate mortgage contracts has been falling and is now below the 1% barrier. In this context, the question arises: is now a good time to renegotiate the spread?
Key points to bear in mind before renegotiating the spread
Renegotiating the spread is, in fact, one of the possible solutions for reducing the instalment on your house. However, it’s important to remember that the fall in Euribor doesn’t have an immediate effect on mortgage instalments. The instalment will only change when the index (Euribor) is revised, which can happen every three, six or 12 months. In addition, banks naturally don’t want to lose the profit margin represented by the spread, and many have found ways to maintain their income even by lowering this rate.
Review of the index: The spread corresponds to the bank’s profit margin. The index revision is the moment when the instalment is changed. It is essential to know how often this review takes place.
Careful analysis: If the bank offers to renegotiate the spread, analyze the offer carefully. You are not obliged to accept. Also check out offers from other institutions.
Simulate the impact: Carry out a simulation to understand how reducing the spread will affect your current instalment.
Renegotiating the spread can be an excellent option for lowering your instalment. However, it’s important to inform yourself well and consider all the options.
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