Different Types of Home Mortgages in Spain



In Spain there are many self-governing areas, each with their own regional federal governments, so it will be impossible to detail each and every situation ranging from Valencia to Bilbao, Barcelona to Seville, however this article will try to offer a comprehensive overview of the basic scenario, rather than a gloss-over of the bottom lines.

Maybe the first indicate point out is that in Spain there are two main monetary entities that you can make an application for a home mortgage from. The banks in Spain work all on a similar basis, and are classes as Bancos - International brands such as BBVA and Banco Santander will recognize with most readers. The second kind of entity are the "cajas" or "cajas de ahorros" which are generally self-governing societies, formed as savings banks or building societies - frequently born in rewarding autonomous regions and sometimes broadening nationwide. Perfect examples would be Caja Madrid, Catalunya's La Caixa, and Caixa Catalunya. These entities are in some cases simpler to acquire a home mortgage from, although conditions can frequently be simpler controlled to the favour of the caja, rather than those rules carefully set down by the Banco de España.

It's incredibly common in Spain for an interest rate to be applied to your loan sum on a yearly basis, with a modification each calendar year, around the very same date as you sign your home mortgage. This means that although interest rates may vary, as they tend to do, then if you occur to sign your home mortgage in the "greatest peak" of interest, then you will pay that quantity of interest for the whole year - even if interest rates go down. Mortgage "trackers" working on a month to moth basis, understood throughout the world, are unidentified in Spain.

Just to make things more complicated, there are then two different kinds of indexes your bank or building society can chose to utilize concerning your policy. The Euribor is the European Rate of interest, although it deserves keeping in mind that within the Eurobor, there is a separate (constantly higher) Euribor Home loan rate.

The second Rates of interest that might be used is the more stable IRPH, which takes an average of the previous 4 months Euribor and after that calculates the rate in this manner. Any loan from a check here bank or building society will charge the customer (that's you) one of these two rates, plus anywhere in between 1-3%, depending upon the threat, size of the home, readily available guarantors, and so on (remember, my example here is for first time purchasers).

Any loan from either entity generally has a 1% opening charge on the net price, and the very same for any cancellation before the time of the loan expires - loans are typically offered for 30 years, although in current years, particular banks have actually given loans of up to 50 years, or those which will be acquired by next of kin/offspring. This suggests that switching and changing home mortgages over banks is almost difficult in Spain, provided the expenses involved.


Maybe the first point to point out is that in Spain there are two primary financial entities that you can apply for a home mortgage from. It's very common in Spain for an interest rate to be applied to your loan amount on an annual basis, with a modification each calendar year, around the exact same date as you sign your mortgage. This indicates that although interest rates may vary, as they tend to do, then if you happen to sign your home mortgage in the "greatest peak" of interest, then you will pay that amount of interest for the whole year - even if interest rates go down. Mortgage "trackers" working on a month to moth basis, understood throughout the world, are unknown in Spain.

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