The continued increase in Euribor rates in recent months meant that families - who opted for a variable interest rate - saw their mortgage loan installments increase. This week, Euribor rates rose, at three, six and 12 months, compared to Friday, in the intermediate term for a new maximum since January 2009.

The six-month Euribor average rose from 1.596% in September to 1.997% in October. For example, using this simulator, a mortgage of 150 thousand euros, with a spread of 1% and a term of 30 years (360 installments), currently pays a monthly installment of 632.16 euros.

If, hypothetically, the six-month Euribor rises to 2.5%, upon revision, the installment of this contract will rise to 673.57 euros a month, translating into an increase of 41.41 euros.

This scenario, along with inflation, has made families lose purchasing power and facing some financial challenges. But, between amortizing capital and negotiating new terms of the credit agreement, there are some ways to get around this situation and reduce your charges.

amortize capital

If you have financial availability - for example, resorting to extra income such as the Christmas subsidy or money that has stopped in a term deposit that is currently losing value -, the early amortization of the credit can be advantageous in this period of rising interest rates, since will translate into a significant relief in the monthly budget.

Thus, not only will you relieve the family budget, but also reduce the total interest bill you will pay on your home loan.

You can also choose to reduce the term of the contract, instead of reducing the installment, thus paying the same amount every month, but for less time.

Extend the term of the contract

Extending the term of the contract, through renegotiation with your bank, may be the solution to immediately reduce charges. However, be aware that this extension brings with it an increase in the total interest bill.

There is also the possibility of asking for a total or partial grace period during which you have the option of not paying anything or paying only the interest. This is an alternative that allows customers to have some time to recover their financial stability.

Switch to fixed rate

The fixed interest rate remains the same throughout the term of the loans, with no impact from changes in Euribor rates. This rate is defined by the bank or credit institution, taking into account factors such as the customer's credit risk, the ratio between the loan amount and the property value - known as loan-to-value (LTV) -, the guarantees of the customer and the risk of fixing the interest rate during the established period.

Under normal market conditions, the installment of a fixed rate loan is higher than the installment indexed to Euribor. However, given the current scenario, the fixed rate may be appealing.

But before making any decision you should answer some questions: What is preferable for your financial situation? Pay more now and have stability in the future, or pay less now and risk paying more later? Is the house to live in for the rest of your life or do you intend to move in the coming years? Is that, for example, if you want to terminate the credit agreement before the deadline you will have to pay a commission for early repayment. And this commission is higher for fixed rate credits.

The mixed interest rate system may also be an option to consider renegotiating with your bank, as it allows you to have a fixed rate for an initial period - 5, 10 or 15 years, to be defined with the bank - and, subsequently, a rate variable.

transfer the credit

If you can't get more advantageous conditions from your bank, you can go look for what the competition has to offer. Analyze the market and ask for proposals from other banks. If you are offered better conditions at another institution, you can transfer your mortgage loan.

Transferring your credit can bring you some advantages:

· Possibility of reducing the spread of your home loan;

· Reducing the value of compulsory insurance by transferring the policies to another entity;

· Removal of products associated with the contract;

· Easier change of contract maturity;

· New valuation of the property reveals an increase in the price of your home.

Font: Dinheiro Vivo