Fixed or Variable Mortgage in 2025: Which Option Suits You Best?

Choosing between a fixed-rate and a variable-rate mortgage is one of the most important financial decisions when buying a property. Both options offer significant benefits, but the right choice depends on your financial stability, risk tolerance and long-term plans. In a dynamic market like Mallorca, understanding these differences is essential for making a confident and informed decision.

Main Differences Between Fixed and Variable Mortgages

Fixed-Rate Mortgage

• Monthly payments remain stable throughout the entire loan term.

• Ideal for buyers who value predictability and long-term financial security.

• Protects you from future fluctuations in the Euribor interest rate.

  
  

Variable-Rate Mortgage

• The interest rate changes according to the Euribor plus a differential.

• Often starts with a lower monthly payment.

• Involves risk: if the Euribor rises, your monthly instalments will increase.

  
  

Advantages and Disadvantages in the 2025 Market Context

✔ Advantages of a Fixed-Rate Mortgage

• Predictable monthly payments for easier financial planning.

• Full protection against future interest rate increases.

• Particularly suitable for buyers with seasonal or irregular income — very common in Mallorca.

  
  

✘ Disadvantages of a Fixed-Rate Mortgage

• Higher initial interest rate compared to variable mortgages.

• You cannot benefit from potential Euribor decreases.

  
  

✔ Advantages of a Variable-Rate Mortgage

• Lower initial monthly instalments.

• Potential long-term savings if interest rates remain stable or decrease.

• Attractive option for buyers with strong, stable finances and higher risk tolerance.

  
  

✘ Disadvantages of a Variable-Rate Mortgage

• Uncertain monthly payments that may increase significantly.

• Could be more expensive in the long run if interest rates rise.

• Less suitable for buyers who require consistent, predictable budgeting.

  
  

Mortgage Market Trends in 2025

• Most new mortgages in Spain continue to be signed at a fixed rate, mainly for the security they offer.

• Banks are offering competitive spreads on variable-rate mortgages, making them appealing for certain buyer profiles.

• Economic forecasts remain uncertain, motivating many buyers to prioritise stability over potential—but unpredictable—savings.

  
  

My Recommendation as a Real Estate Advisor in Pollença and Mallorca

Working daily with buyers across Pollença, Puerto de Pollença, Alcúdia and surrounding areas, I have seen how the right type of mortgage depends on each buyer’s financial reality:

• If you prioritise financial peace of mind, a fixed-rate mortgage is usually the safest choice.

• If your financial situation is strong and flexible, and you are comfortable with some level of risk, a variable-rate mortgage could offer advantages.

• Always analyse several scenarios: how your payment changes if the Euribor increases, whether you plan to make early repayments, and how future income changes may affect your budget.

  
  

If you are considering buying a property in Mallorca, I can help you understand your options and choose the most suitable mortgage type for your long-term goals.

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