The cost of mortgage

A mortgage loan is the transaction whereby a bank offers a user a certain amount of money, at a relatively low interest rate, in exchange for mortgaging the property they are buying. Knowing the terms of a mortgage to buy a property in Spain will help us to negotiate with the bank a fairer loan. 

The average mortgage in Spain is currently 126,250 euros. The average initial interest is 2.5% and the duration is less than 25 years. 40% of these mortgages are fixed rate, while the rest are variable rate. 

Mortgage concepts to take into account

There are a number of concepts to consider when determining which mortgage loan is best for us: 

  • Interest: is the price paid for the loan and can be fixed or variable; the higher the interest, the more expensive the loan
  • Repayment terms: period in which the bank expects us to pay back the loan (the average is around 30 years)
  • Financing: financial institutions impose a series of limitations on loans that exceed a certain percentage of the appraised value
  • Mortgage fees: opening fees, early redemption fees and novation fees
  • Mortgage clauses: they establish the conditions that can alter or limit the operation of the mortgage in Spain

The costs of a mortgage

Taking out a mortgage involves a series of expenses that we must take into account. The appraisal of this one, for example, usually varies between 200 and 500 euros. A procedure that allows the bank to know the value of a property to calculate the money it can leave us. 

Next, there are the expenses of the notary and the Registry, in charge of giving faith of the deeds of the loan and to register the deed of the house. Also it would be necessary to make the payment of the agency and the tax of the mortgages or Tax of Documented Legal Acts.

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