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Repayment mortgages
The repayment mortgage is the most common type of mortgage. The periodical (typically monthly) repayment quotas include capital repayments and interest and are fixed on a periodical basis. Spanish banks offer a repayment period of up to 30 years, depending on the age of the applicant. Most banks require that the mortgage be paid off in full by the age of 70. Older applicants can avoid this by including their children on the mortgage deed either as applicants or guarantors. The loan amount can be to a maximum of 80% of the value of the property.
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Interest only mortgages
A type of mortgage product where you only pay interest during a fixed period of 5-10 years. Thereafter the repayments revert to capital and interest. The amount that may be borrowed can be up to 70% of the value of the property. This product is attractive especially for property investors who plan to sell the property before the end of the loan period, thus keeping monthly payments as low as possible.
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Low start mortgages
Similar to the repayment mortgage but the monthly repayments (capital and interest) increase by 2% annually. The repayment quotas are low during the first years of the mortgage and high during the last years. The terms and conditions of this product make it suitable especially for young people who expect their incomes to rise by at least 2% annually. It is also an alternative product to the interest only mortgage, it has higher repayment quotas but the terms and conditions for this product are more favorable. The amount that may be borrowed is up to 80% of the value of the property.
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Construction/Self build
Do you want to build your own home? No problem! Once land is acquired, we can arrange stage payments. Payments can also be interest only if required.
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Equity releases
If you already own a property in Spain and need cash you can apply for an equity release and get up to 60% of the value of your property.
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Non status mortgage
If you can’t provide proof of income to support your mortgage application you can still get a mortgage. The amount that may be borrowed can’t exceed 120,000 euros or 50% of the value of the property.
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General information: Variable rate loans - Both variable and fixed rate mortgages are available.In practice the vast majority of mortgages (over 95%) are with variable interest rates as they tend to be about 3 percentage points cheaper than the ones with fixed interest rates. The reason for this is that banks are no risk takers and charge a very high risk premium for providing the mortgage taker with the security and comfort to have fixed repayments. However, as it is advantageous to have a fixed rate loan when the interest rates rise sharply, it’s a disadvantage when the interest rates move in the opposite direction. If you want to cancel the loan the commissions to do so (3-4%) are many times higher than the commissions to cancel variable rate loans (0,50-1%). The interest rate on the variable rate loans is based on EURIBOR (Euro Inter Bank Offered Rate), the interbank lending rate in Spain . The bank adds on a margin on top of that and the size of this margin naturally depends on the customer profile. A mortgage application that seems very attractive to one bank can be “penalized” with a high interest rate by another bank with another risk policy.
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