One of the main headaches we have when thinking about mortgages in Spain, is the amount of money we must pay to the bank after it grants it to us. Let’s remember that the banks will lend us money, and we must pay it back with interest in a certain time.
The amount we have to pay back to the bank will depend on the term, the price of the house, the percentage of the mortgage and the interest that has been applied.
We know that these are too many mathematical operations to complete, so today we will tell you more about the best Spanish mortgage calculator that will make your work much easier and you will have an idea of how much you will have to pay month by month.
How to use the mortgage calculator in Spain?
Making mortgage calculations is very complex, this can take us more time than expected, and doing it manually can result in errors that will make us unbalance our finances. To avoid this, you can use this calculator and we will tell you in a simple way, how to use it.
This calculator has several fields to fill in or choose from, and here we explain one by one what they are:
Purchase Price
In the space of “Purchase Price” you must put the exact amount in Euros that the property costs. Here you will not include taxes or any other added value. It is only the base sale price that the seller has offered you, and with which you will go to the bank to make the quotation.
Mortgage Amount
In the “Mortgage Amount” section you have a horizontal line with an indicator that moves from side to side. There you can calculate the percentage of the mortgage you intend to receive. For example, if the Purchase Price of the property is 1,000,000 euros, and you are given a 50% mortgage, the Mortage Amount will be 500,000 euros.
This is the amount that the bank will give you as a loan so that you can buy the property. The higher the percentage of the mortgage they give you, the higher the amount they will give you and that you must pay back to the bank.
Interest Rate
As in the previous section, you will find a horizontal line with an indicator that can be moved from one side to the other. What you must select is the interest rate of the loan repayment that will be made to you.
For example, if the property costs 1,000,000 euros, and you will be granted the mortgage with a 3% or 4% interest rate, this results in 20,000 euros. This 20,000 euros is the extra charge that the bank will make to you for lending you the money to buy the property.
Something important to take into account is that the interest rate in Spain is usually between 2% and 4%. How much you are granted will depend on the price of the property, the amount of the mortgage, your profile as a client or the bank or lender from which you request the money.
Repayment Term
Below, you will find the option to select the amortization term. All mortgages in Spain have an amortization term, which is the period the customer has to pay back the full amount of money to the bank that has made the loan.
The longer the amortization period, the lower the amount to be repaid to the bank. And if a mortgage is repaid in a short period of time, the payments will be higher, but you will get out of debt sooner.
In Spain mortgages can be given between 5 and 30 years. The issue is that not all clients are given the maximum amortization term. How much they give you depends on your age, the amount you are requesting and the credit profile you have.
Fees and Taxes
The purchase and sale of a property in Spain is regulated and there are a number of formalities that must be completed. Each of these procedures has a cost and the amount paid for them will depend on the price of the property.
Then, if the property you want to buy is more expensive, what you will pay in taxes will be higher than what you would pay for a cheaper house. All this money goes to the notary, registry, taxes and others.
There is no exact way to determine what the percentage of taxes and fees will be, but it is recommended that it be calculated between 10% and 14%. This is why the calculator defaults to 12% as the most common percentage.
Keep in mind that the cost of these procedures is your responsibility. That is to say, it will not be included in the purchase price of the property, and the bank will not give it to you as a loan. This percentage must come out of your savings and you will pay it in full.
Savings Needed
Finding a 100% Mortgage in Spain for 1M is not a possibility, it starts in 70 to 80%. Remember that this is an approximate amount. Each bank may offer you different conditions, that are more or less favorable even for a Mortgage Broker. This means that you will need to have already saved all the money to be able to buy the property. How much you have to save will depend on the amount the bank will give you as a loan, and the fees and taxes.
Let’s imagine that the property costs 1,000,000 euros, and the bank has granted you a 50% mortgage. This would require you to have 500,000 euros in savings just to cover the shortfall in the value of the property. But in addition, you must add the estimated 12% of fees and taxes, which would be another 120,000 euros.
In other words, your savings would have to be 620,000 euros, in order to be able to buy a house in Spain if the mortgage you have been given is only 50%.
Amount payable per month
This is a result that appears at the beginning of the calculator, but we explain it at the end so that you know how it was obtained. After you have specified all the details of the amortization term, the interest rate, the mortgage percentage and the price of the property, you will get the result of the amount per month that you have to pay.
Remember that this is an approximate amount. Each bank may offer you different conditions that are more or less favorable. So try to quote in advance.
Common mistakes when applying for a mortgage in Spain
- Choosing the first mortgage offered
- Do not negotiate the interest rate or the amount to be granted.
- No savings
- Do not quote in several banks to choose the best mortgage
