What Is a Discounted Fixed-Rate Mortgage and How to Benefit

When applying for a mortgage loan, finding the best conditions can make a difference in the total cost of the home. One of the most interesting options in the financial market is the discounted fixed-rate mortgage, a product that allows access to a reduced interest rate if certain requirements are met.

What Is a Discounted Fixed-Rate Mortgage?

A discounted fixed-rate mortgage is a type of mortgage loan with a fixed interest rate that offers discounts on the interest rate in exchange for purchasing additional products or services with the same bank. This means that, although the interest rate remains stable throughout the life of the loan, you can reduce it by subscribing to certain linked products.

Among the most common products that banks usually require to apply the discounts are:

• Direct deposit of salary and bills
• Purchase of insurance (life, home, payment protection)
• Use of credit cards with a minimum spending
• Opening pension plans or investment funds

Each bank establishes its own conditions and requirements to apply the discounts, so it is essential to analyze the terms before committing.

Benefits of a Discounted Fixed-Rate Mortgage

Discounted fixed-rate mortgages offer several advantages for borrowers, including:

1. Lower Interest

By purchasing the required additional products, a reduction in the interest rate is obtained, which translates into more affordable monthly payments and significant long-term savings.

2. Stable and Predictable Payments

As it is a fixed-rate mortgage, the monthly payments don't fluctuate with changes in the Euribor, providing peace of mind and financial stability.

3. Access to Better Banking Conditions

The purchase of additional products, such as insurance or pension plans, can provide additional advantages, such as discounts on fees or greater financial protection coverage.

4. Greater Security Against Interest Rate Increases

Since the interest is fixed, holders of these mortgages are protected against potential increases in market interest rates.

Considerations Before Taking Out a Discounted Fixed-Rate Mortgage

Although this type of mortgage can offer economic advantages, it is crucial to evaluate some aspects before making a decision:

• Cost of Linked Products: The insurance and other services purchased may represent an additional expense, so it is necessary to analyze whether the interest reduction is really worth it.
• Loan Duration: Depending on the chosen term, the discount may not generate as much savings as in longer-term mortgages.
• Conditions for Early Cancellation or Repayment: Some entities may apply penalties if you wish to cancel the loan early.

What Are the Best Discounted Fixed-Rate Mortgage Options?

Each bank offers different conditions, so comparing is key to finding the best option. These are some of the best fixed-rate mortgages you can consider in 2024, among which you will find offers such as:

• Discounted fixed interest from 2.5% with home insurance linkage and direct deposit of salary.
• Almost 0.5% discount if life insurance is purchased and the credit card is used with a minimum annual spending.
• Fixed-rate mortgage with a staggered discount according to the number of products purchased, with a reduction of up to 1% in interest.

A discounted fixed-rate mortgage is an excellent option for those seeking stability in their payments and a reduction in the interest rate in exchange for purchasing additional products with the bank.

Before deciding, compare the options available in the market and choose the one that best suits your financial situation and long-term needs.