Choosing the right Spanish mortgage is key to having a more comfortable life in Spain. A mortgage is a long-term loan for which a significant amount of money is requested, and the mortgage conditions are sometimes not easy to understand.
To help you take the right steps before taking out a mortgage, Yourspanishmortgage has identified the key issues that you will need to address before you can identify a good offer:
1)Choose between a fixed or variable mortgage.
Fixed Rate Mortgage: As the name suggests, this is an interest rate that does not vary throughout the life of the loan. If you want to borrow more money against your mortgage, you will probably have to select a new rate on the additional amount you borrow.
Variable Mortgage: Variable interest is calculated by adding together two components: a baseline rate (usually 12-month Euribor) and a differential, a percentage fixed by each bank that never changes. However, the Euribor changes every month, so depending on the level set by this indicator, the interest to be paid may increase or decrease and, with it, the monthly mortgage payment
2)Determine the repayment period that best suits your situation, finances and outgoings.
When choosing a mortgage, you should also determine the years over which you want to repay your loan. Remember that the longer the period, the lower the payment will be that you have to make each month, but you will pay more interest over the term of the mortgage.
3) Should you refinance your home in the UK to buy in Spain with cash?
Some UK mortgage lenders allow borrowers to remortgage to take out cash to purchase property in Spain. This is the preferred option for some who plan to let their property or want to live between two countries, but many prefer to take a Spanish mortgage. It is worth considering if you really need a Spanish mortgage.
3)Find out the maximum percentage of the total cost of the property that the bank is willing to finance.
Spanish banks usually grant no more than 70% of the valuation figure (or purchase amount) of the property you wish to buy. Work out exactly how much deposit you have and whether you could put down more to access a cheaper rate.
4)Examine the fees involved in a mortgage.
Examine the expenses and fees that you will have to pay. In addition to the costs associated with purchasing a home and arranging the mortgage itself, you should not forget that many offers include other additional costs.
5)What products would you have to purchase in order to achieve a better price for your mortgage
Consider which additional products you are interested in purchasing in order to reduce the price of your mortgage. Sometimes banks may offer a lower interest rate when you purchase certain financial products, for example: Life Insurance, Home Insurance, a Current Account or Pension Plans.
Considering all of these factors, it is worth spending time comparing and carefully calculating the monthly cost of your future mortgage.
Do you want to know how much you’ll have to pay monthly for your mortgage? Your Spanish mortgage can connect you with trustworthy Spanish mortgage experts who provide Mortgage Simulators so you can calculate your mortgage payment in just a few steps.
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