The choice between fixed or variable rate has been an option for a long time. Although in Portugal there is a strong tradition of variable rates, there are also people who go further with fixed rate, especially now with the Euribor rising.

To better explain this issue, we spoke to Rui Oliveira, CEO of Decisões e Soluções 360º in Lagoa, who told us that most Portuguese opt for the variable rate, unlike some foreigners. "The ones who come to us and always ask us for a fixed rate are the French. They were the first who came here and said they wanted the whole period with a fixed rate. That was not normal in Portugal at the time," he said.

The years have passed and today fixed rates are more frequent, but it is still not the rule, nor the most advantageous, in Rui's opinion. "In my 32 years of experience, with a fixed rate the bank always wins. It's something I've never done myself, but I accept that there are pros and cons on each side”.

However, Rui admits that in certain situations, clients may benefit from choosing a fixed rate. That’s because clients who want to borrow more money from the bank but are unable to do so at a variable rate. "With a fixed rate, the bank lends more money. For example, last week I had a client who with variable rate the bank lent €80,000, but with a fixed rate the bank went up to §120,000," he told The Portugal News.

What happens with the variable rate is that the bank before accepting the mortgage increases the rate by 3 percent to calculate the client’s effort rate. That is why, with the same income, a person can receive more money with a fixed rate because the bank knows that it is that set value and will not increase so as not to add that 3 percent to the calculation.

On the other hand, "we have a drawback with the fixed rate, which is amortisation. When you take out a variable-rate loan, the penalty for early repayment is 0.5 percent. In the fixed rate it is 2 percent", he said, adding that this makes the fixed rate not suitable for most investors, who intend to resell afterwards.

New solutions

There is another option that may be good for buyers who are more concerned about the current situation, but who do not want to miss out on the good conditions that variable rates can offer, especially in the long term. We are talking about mixed rates.

"Most people are still asking for variable, but there are already people asking for a mixed option. It is possible to ask for fixed for a set number of years and during this period you know that there will be no change. This is what is happening most after the variable", he said.

For further information, please call Rui at 919 290 107 (preço chamada móvel nacional) or 282 356 496 (preço chamada fixa nacional) or visit Decisões e Soluções 360º office at Rua Dr. Afonso Costa nº 27 in Lagoa.


Paula Martins is a fully qualified journalist, who finds writing a means of self-expression. She studied Journalism and Communication at University of Coimbra and recently Law in the Algarve. Press card: 8252

Paula Martins