The mandatory simulation document: what happens to your mortgage when interest rates shift?
12/02/2026
When someone takes out a mortgage, the bank is required to provide all the information in writing that the customer will need about the applicable conditions.
In the case of a variable-rate mortgage, there must be a stand-alone document with a simulation using concrete amounts showing how your monthly instalments would change if interest rates rose, declined or remained unchanged. Its purpose is for the customer to be aware of the risk of taking out a variable-rate mortgage, since interest (and therefore, instalments) will increase or decrease based on how the reference rates (usually the EURIBOR) behave.
But let’s not get confused. This isn’t a prediction, but rather a simulation that provides a guideline. Interest rates can vary more than what the scenarios show, meaning that the actual instalment in the event of a higher EURIBOR, for instance, will be higher than in the simulated scenario. The intention is to show this risk, so that you can make an informed decision on whether a variable-rate mortgage is right for you.
This document includes three simulated scenarios:
- Stable rate
- The EURIBOR is assumed to remain the same as when the mortgage loan is arranged. For example: If you sign a €150,000 mortgage over 25 years at EURIBOR + 1% and the interest rate stands at 2%, the initial interest rate to be paid will be 3%.
- Approximate instalment: €711 per month if the EURIBOR remains at 2% over the life of the loan.
- Interest rate hike
- It is assumed that the EURIBOR increases. For example: Following the previous example, the EURIBOR could rise to 3% in one year and to 4% in two.
- Resulting rate: 4% → approximate instalment: €792
- Resulting rate: 5% → approximate instalment: €877
The document shows the customer how a rate hike can lead to an increase in the instalment of over €150 per month.
- Interest rate decrease
- It is assumed that the EURIBOR decreases. For example: If the index were to drop from 2% to 1%, the rate would be 2%.
- Approximate instalment: €636.
As we have seen, this document helps customers assess the risk, compare what different banks offer and plan ahead, by learning what they would have to pay under adverse scenarios.
