Types of mortgages available on the Spanish market

July 1, 2010 at 2:40 pm Leave a comment

We present you today an overview of Spanish mortgages.

The  majority of mortgages sold in Spain are variable rate mortgages. This is the case for both Spaniards and foreigners. The payments vary according to the base rate set by the European central bank.  Borrowers with variable rate mortgages cannot be certain what their re-payments in the future will be . If the interest rate falls they will pay less, but if it rises they will pay more.

There is another type of mortgage, the so-called fixed rate mortgage. This offers the buyer higher interest payments in the short term. The advantage of this type of mortgage is that gives the borrowers the insight into what his repayments will be for a period of time.

Some mortgage lenders also offer a mixed mortgage that involves a certain period (for instance 5 years) of fixed interest payments and a floating rate thereafter.

And recently some Spanish mortgage lenders have started offering an interest only mortgage under which borrowers only pay interest on the loan and then return the capital either at the end of the mortgage or at some point in the future during the lifetime of the mortgage. This kind of Spanish mortgage can be very interesting for foreign investors who plan to rent out their Spanish property to cover mortgage costs and do not plan to hold their property for more than 10 years.

Mortgage lenders in Spain have also have increased the lifetime of mortgages that they are prepared to lend (also depends upon the age of the borrower). Longer Spanish mortgages reduce the size of monthly mortgage repayments and therefore stimulate demand for property by making it accessible to a wider market.

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Entry filed under: Everyday things, Real estate. Tags: , , , , , , , .

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