EuriborHow 12-month Euribor changes a loan payment
If your euro loan has a variable rate linked to 12-month Euribor, the bank does not pick a new rate at random each year. It takes the Euribor figure named in the contract, adds the margin agreed at the start, and calculates a new monthly payment on the amount you still owe.
This page walks through that process in plain language. It does not replace your contract or your bank’s letter.
The formula in one line
Interest rate for the next period = 12-month Euribor (the figure the contract names) + differential.
The differential is the extra percentage the bank adds. If the contract says Euribor + 0.90%, that 0.90% stays the same at a normal review. Only the Euribor figure is updated.
Which Euribor figure? In many household contracts it is the monthly average of 12-month Euribor for a named month. It is not automatically today’s daily rate. Details: daily rate versus monthly average.
How the payment is calculated
Most euro home loans use equal monthly payments (sometimes called the French method). Each month you pay interest on the balance and you repay part of the principal. When the interest rate goes up, the payment goes up. When the rate goes down, the payment goes down — unless the contract has a floor that stops the rate falling below a set level.
The calculators on this site use that standard method. They do not include insurance, arrangement fees or extra products. Treat the result as a guide.
Example (approximate)
Assumptions: €150,000 still owed, 25 years left, differential 0.90%. Equal monthly payments.
| Before | After | |
|---|---|---|
| 12-month Euribor (monthly average, example) | 2.20% | 3.10% |
| All-in rate | 3.10% | 4.00% |
| Approximate payment | €719 | €792 |
The increase is about €73 a month on this example. A larger balance or a shorter remaining term will move the payment by a different amount. Run your numbers in loan impact.
Annual review or six-month review
Some contracts update the rate once a year. Others update every six months. That only changes how often you copy a new Euribor figure. The formula stays the same.
Always copy the month the letter names. Comparing a six-month review with last year’s daily rate is how people think the bank “used the wrong Euribor”.
Floors and caps
A floor means the rate used for the payment cannot fall below a stated level, even if Euribor plus the differential would be lower. A cap works in the opposite direction. If your letter and this calculator disagree by a lot, look for a floor or cap before you assume an error in the average.
What you should do with a review letter
- Check that the tenor is 12-month Euribor (or note if it is another tenor).
- Check the month used.
- Compare that month with the history table.
- Add the differential from the contract.
- Check the outstanding balance and remaining term on the letter.
- If you want a second view of the payment, use the calculator. If the gap is large, look for fees, insurance, a floor, or a different tenor.
What does not change at a normal review
The differential does not change unless you renegotiate the loan. The repayment method does not change. The outstanding balance changes because you have been paying principal; that is expected. The Euribor figure is the part that is updated from the market.
Insurance, account fees and extra products are billed separately. If you put them inside the Euribor box of a calculator, the result will look too high or too low. Add them after, if you need a full household budget.
Between two reviews
The payment stays the same until the next review date, even if daily Euribor moves every morning. That is why watching the daily table is useful for planning and not the same as seeing a new payment land in your account.
If you make an extra repayment, the balance falls. At the next review the bank should calculate the new payment on that lower balance, with the new Euribor figure. The extra repayment tool on a bank app and the calculator on this site are not the same screen. Use the bank’s figure for the new balance, then this site for a second look at the rate.
Mixed-rate loans
Some loans are fixed for the first years and variable after that. Euribor only starts to move the payment when the variable period begins. Until then, a change in Euribor is information, not a new instalment.
Fixed-rate loans
If the loan is fixed for the whole term, Euribor does not change the instalment. You can still read the tables as general information. They will not move the standing order.
Questions people ask
If Euribor falls tomorrow, does my payment fall tomorrow? No. It falls at the next review, and only if the contract uses a figure that has also fallen.
Should I compare my payment with a neighbour who has the same bank? Only if the differential, the remaining term, the balance and the review month are the same. They rarely are.
Is a 0.10 point move important? On €150,000 over 25 years it is a modest change in the monthly payment. On a much larger balance it is more visible. The calculator is there for that reason. Do not guess from a headline.
If the loan is in another currency
This explanation is for euro loans linked to Euribor. A dollar loan linked to SOFR is a different product. See Euribor versus SOFR.
Official administrator of Euribor: EMMI. Informational only.