Variable repayment mortgages
Standard repayment mortgage on which capital (plus interest) is paid back from day one. Therefore, with each monthly repayment, and as of the first month, the client is reducing the capital owed.
The interest rate is calculated on the Spanish base rate EURIBOR (currently less than 0%), plus a certain percentage, depending on the loan to value ratio.
Unlike in the UK where the main costs are the arrangement and valuation fees, in Spain a mortgage has to be notarised and tax paid on the amount borrowed, so setting up a loan will work out more costly in the short term. However, taking a longer term view would mean that the low interest rate in Spain would make up for the higher initial set up costs.
- Arrangement fee of 1% of the amount financed
- Mortgage Tax of approximately 1.8% of the amount financed
Other fees which vary according to amount borrowed but for purposes of this information we have used a loan of 150,000 Euros
- Notary fees (approximately €860)
- Land Registry fees (approximately €300)
- Bank legal fees (approximately €360)
- Between 300 and 500€.
Redeeming the loan
Most Spanish lenders charge a redemption penalty of 0.5 and 1% if you wish to pay the loan off earlier. However, this does vary according to lender and the type of loan you take out.
However, please note that there will be costs involved in going to the Notary and lifting the charge as is the norm in Spain. Costs vary according to amount borrowed. Please contact us for specific costs.