Spanish Mortgage Calculator

USING A CALCULATOR TO WORK OUT THE COSTS OF A SPANISH MORTGAGE

After 10 years in the Spanish property industry, it still amazes me just how many people visit Spain intending to buy a property with the assumption that getting a mortgage in Spain will be easy.

Incredibly, many don't actually know how much they will need to borrow as they don't understand the buying process well enough or the costs involved, while others haven't the first idea as to what their repayments might be as they don't properly understand the banks' lending criteria for their secure eloan mortgage.

Many don't even understand what rates and terms they offer or the types of mortgages that are generally available. The lesson as always, is to be prepared.

Use this handy interest-only Spanish mortgage payment calculator below to work out what your monthly liabilities might be.

Note also the following information about Spanish mortgages. They are slightly different to those offered in the UK.

Typical Rates

At the time of writing in April 2010, bank mortgage rates are at all-time lows. Like all banks across the world, Spanish banks use a base rate known as the Euribor as the basis for their mortgage products. As a prospective borrower you will be offered a percentage over and above the base rate for your mortgage or personal eloan.

These days, as banks seek to recapitalise after years of irresponsible lending, you will be lucky to borrow at less than 2% over base rate. Gone are days when you could sign a mortgage deed for a little under 0.5% over the Euribor.

Set-Up Costs

In addition to the taxes, land registry, notary and legal fees that you should factor into your budget (approximately 10%), you should ask your bank about their fee for the opening commission. Many will try to charge you 1% or more. Note that the law states that no bank has the right to charge you more than 0.5% for the privilege. Be very careful here.

Unreasonable Fees For Bankers' Drafts

Unbelievably, many banks will charge you outrageous amounts for simply the production of a bankers' draft that you will give to the vendor at the notary. I have seen customers charged between 250 euros and, in one case, 3,000 Euros for this simple administrative task. In the latter case, the client didn't even have a mortgage with the bank but had simply made a transfer from the UK in order to convert his funds to Euros.

Large Deposits Required

One assumption that many make is that near 90% or 100% mortgages will be available in Spain. These days this is virtually impossible. Expect no more than 70% than your bank's conservative valuation which may not be the price you have agreed with a vendor. In the past, it was possible to achieve a higher or over-valuation resulting in zero down interest only loans.

Note these days have long gone. Spanish banks want to see clear evidence of your own funds and your ability to make the monthly repayments.

This article has been kindly provided by Chris Hawkins, Director of Luxury Spanish Villas in Javea.

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