Blended rate mortgages are a combination of a fixed rate mortgage and an adjustable rate mortgage. This means that for example in the first few years the monthly amount does not vary and remains at a fixed rate, as in fixed rate mortgages. As soon as the agreed fixed rate period expires, the mortgage holder starts paying the variable rate. The monthly payments will vary and will increase or decrease depending on their reference index, in most cases the Euribor. This fluctuation depends on the terms set for the interest rate review, which is usually every 6 to 12 months. This type of mortgage is very similar to adjustable rate mortgages, including some special terms and conditions.
Mixed rate mortgage
Mixed rate mortgage, how does it work? Advantages and disadvantages
For example, a mixed-rate mortgage provides for a fixed-rate monthly installment during the first few years and for the rest of the life of the loan it will be determined by a variable interest rate or the interest rate can switch from fixed to variable (or vice versa) at fixed deadlines and/or under certain conditions indicated in the contract. Advantages and disadvantages are alternatively those of the fixed rate or the variable rate.
How is the interest rate set on a mixed rate mortgage?
