News

Check out market updates

Information about Mortgages in Spain

Carrying out a mortgage loan is a long and complicated process. Most people are unaware of the operation of these loans until the documentation they need when going to the financial institution to apply for a mortgage. Valuation, interest rate, connections, commissions. These are just some of the words that are part of this type of contract and must be known before contracting the mortgage.

Carrying out a mortgage loan is a long and complicated process. Most people are unaware of the operation of these loans until the documentation they need when going to the financial institution to apply for a mortgage. Valuation, interest rate, connections, commissions. These are just some of the words that are part of this type of contract and must be known before contracting the mortgage.

To apply for a mortgage in 2018 with a guarantee of success, firstly, by acquiring the appropriate mortgage information to know what we need and how far we can get into debt. The first thing is to find out about the market to find the mortgage that best suits your needs, then you need to contact the entities to know what specific documents they need, because not all banks ask for the same information. Because before going to banks you have to have all the documentation ready. Whether it is an employee, self-employed or society, a well presented mortgage file, gives several advantages at the time of obtaining credit, so as not to cause mistrust.

On the other hand, the mortgage loan is the loan contract signed in public deed between the bank and the borrower. The mortgage is the main real guarantee, which is not unique, that the bank has to collect the money it has lent and the commissions, interests and additional expenses agreed upon. Banks in 2018 do not grant more than 80% of the appraised value of the mortgaged property, which limits customers with savings of more than 30% access to a mortgage.

To get a 100% mortgage in 2018, it is necessary to provide a double guarantee. The property that is acquired must be free of charges, so any mortgage that the seller has signed must be canceled, even if the debt has already been paid to the bank. Notary fees, agency fees and registration of this cancellation go to account of the selling party.

In general terms in this article we are going to discuss the basic points to be taken into account in order to sign a good mortgage in 2018, based on the draft law regulating real estate credit contracts presented to the Congress of Deputies on November 17, 2017 and the mortgage guide of the Bank of Spain (2013).

  1. What are the basic mortgage figures that may exist in a mortgage loan?

In addition to the lender bank, they are the following:

  1. Mortgage holders,They assume the debt with the mortgage guarantee of one or several mortgaged properties of their property, but also with all their present and future assets.

  2. The guarantors, like the mortgage holders, are responsible for the debt with all their present and future assets.

  3. Mortgages, not debtors, that they sign the mortgage of their property free of charges as a double guarantee of the mortgage loan granted to the mortgage holders. The second mortgaged property only responds for the agreed mortgage liability, not for all the debt.

  1. What is the Amount of the mortgage loan granted?

The banks fix as a maximum fee (which sets the maximum amount to be granted) 30 to 40% of the net income of the applicant. Calculate the monthly payment of your mortgage, entering the value of the outstanding debt of the mortgage loan or amount to be requested (Amount of the Mortgage), the repayment term in years and the interest applied.

It must be borne in mind that, to calculate the interest, if it is a variable rate mortgage is calculated according to the interest the bank takes to simulate the mortgage reference (Euribor or IRPH of entities) we must add the differential accordingly. more or less money will grant. If we calculate the fee in a fixed mortgage, the interest to use is the fixed nominal agreed.

One way to know if you have a chance of being granted the mortgage, is to calculate the monthly fee that would come out and get 30 or 40% of your monthly net income. If the result of applying the percentage to your income (maximum indebtedness), it reaches to cover the quota, it is very probable that you are denied the mortgage. In this case, you must request less mortgage.

For example, if for a couple whose total net income is € 2,500 and they seek a 30-year mortgage, obtaining an offer from the bank of 3% nominal, the maximum fee that the bank would consider they could pay would be between € 730 (ratio of 30% debt) and € 1,000 (40% ratio). Using a mortgage calculator from the bank of Spain we would obtain the maximum amount that the bank would finance us, close to 175,000 € with the most conservative ratio, and about 240,000 € in the most aggressive case. The total interest that we would end up paying for a mortgage of € 240,000, on the other hand, we can also obtain with the calculator of the Bank of Spain, which informs us that at the end of 30 years, in addition to returning to the bank the € 240,000, we will have paid a whopping 124,265 € in interest.

  1. Which Mortgages are better at fixed or variable interest rates?

The answer is depends. And it depends, above all, on your personality. If you want to save in the short / medium term, you will choose a variable rate mortgage. If what you want is peace of mind and always pay the same fee for your mortgage (a fee that you feel comfortable with), you will choose a fixed rate mortgage.

  • In fixed-rate mortgages nominal interest is relatively easy to identify, since it does not vary over time. As much, you have to know how to identify if there are bonuses.
  • Advantages of mortgages at a fixed interest rate
  1. You will know in advance your monthly fee for the entire life of the mortgage.

  2. There is no risk of increases in the interest rate. If mortgages at a fixed interest rate are currently around 2.5% for a term of 25 years, while mortgages at a variable interest rate are at Euribor + 0.85% at best.

  • Disadvantages of mortgages at a fixed interest rate

  1. The Euribor is at historical lows, so mortgages at a variable rate are saving more than ever. In the short term, variable rate mortgages are cheaper than fixed rate mortgages.

  2. The longer term, the higher the interest rate of mortgages at a fixed rate. For example, a 15-year fixed mortgage has an interest rate of approximately 1.9% NIT (Nominal Interest Rate). However, if we hire it at 30 years, the interest rate increases to 2.5% NIT approx. This does not happen in variable mortgages, since the chosen term does not affect the differential.

  • The mortgages at a variable interest rate change in each period, Nominal Interest Rate (NIT) is calculated based on the referential (one-year Euribor) + the agreed differential. For example: To calculate (NIT) = Euribor (0.042 in January 2016) + differential (1.25) = 1.292% NIT.

  • Disadvantages of mortgages at a variable interest rate.
  1. There is risk of increases in the interest rate, The low current values of the Euribor should not lower our guard, since only 7-8 years ago it stood at values above 4%, so when hiring a variable rate mortgage we could be more expensive in the long term.

  1. What are the additional links when getting a mortgage in 2018?

Banks can try to hire us home insurance, life insurance, pension plans or investment funds, in addition to directing the payroll, receipts or we spend with a credit card, to grant us a mortgage in 2018.

However, life insurance can be returned, without having to plead any cause, citing that you accept the unilateral withdrawal right set forth in article 83.a of Law 50/1980 of Insurance Contract ordering the refund of the premium charged. The same can not be done with other insurances, but they can be canceled the following year. Even if they suppose a discount of the type of interest expressed in the writing, the great majority of times it is cheaper to contract them with an insurance broker or directly with an insurer, and it does not compensate the agreed bonus.

  1. Where are the lowest mortgage rates in Online Banking or Traditional Banks?

The main advantage of online mortgages is that they are free of commissions and linked products. However, the banks have bargaining power, when they come, the offers they propose are better than those displayed on their promotional posters. This can be due to the profile of the user: his income, his credit history, the link he already has with the entity … For example, if it is the case of wanting to hire home insurance and other links, it will be appropriate to hire the mortgage with the main bank. For this reason, the characteristics and final conditions of the mortgage can improve those of the online mortgage. No product is, therefore, better or worse in its entirety but more or less suitable for each profile.

  1. What is the necessary documentation to apply for a mortgage?
  • General documentation

  1. The NIF or NIE in force (documents accrediting the person).

  2. Updated working life. You can order one by phone or online to Social Security.

  3. Declaration of the Income Tax of Individuals (IRPF) most recent.

  4. Bank statement of the last months. Not all banks ask for it, but of course we must present it voluntarily if we have nothing to hide (card payments not declared, discovered or embargoes).

  5. Deposit contract (if any) or deed of purchase and sale and mortgage loan (if we are going to request a subrogation or a reunification of debts). They will also request us in receipt of the IBI (contribution).

  6. Updated simple deeds or notes of all the properties that are held.

  7. Last receipts paid for the loans we have.

  8. Rental contract and last receipts if we are currently living in a rented house.

  9. Justifications for another income.

  • Documentation of employees:

  1. The current labor contract. If we are not hired as undefined, they will give us many more problems than if we are fixed.

  2. Three last payslips. They may ask us for more payrolls, according to the criteria of each financial institution.

  • Documentation of the self-employed:

  1. Annual summary of the VAT of the previous year.

  2. Quarterly payments VAT current year.

  3. Split payments of the IRPF of the year.

  4. Latest Social Security payment receipts.

  5. It is advisable to have a dossier with business information, experience, better clients and all the qualitative information that allows us to demonstrate that we are experts in our activity.

  • Documentation for companies:

  1. Corporation Tax, if you are required to file.

  2. Balance and updated Profit and Loss Account.

  3. Deed of incorporation and other deeds of the company.

  4. Information on the main customers, suppliers, position in the market and other quantitative and qualitative data that prove the solvency and professionalism of the business.

  1. What are the best mortgages at a fixed interest rate in 2018?

Compare the interest rates, terms and conditions offered by each bank. In the month of September, there has been positive news and a negative news. We summarize them below:

  • Openbank again modify the conditions of their mortgages. Currently, for a financing higher than 50% of the value of the home you can enjoy an interest rate from 1.65% NIT up to 2.50% NIT at 30 years; decreasing by 0.10% in case of opting for less financing (up to 50%). Openbank remains the best fixed rate mortgage in the market.

  • The mortgage from Bankinter its interest rates have gone down. In exchange for the recent rise in linkages (previously 3 products, and now 4), they have decided to lower their rates by 10 percentage points to compensate. Now we can contract it from 1,55% NIT to 10 years up to 2,25% NIT to 30 years. By the way, in our opinion it is more profitable NOT to hire the linked Pension Plan. Coinc, Bankinter’s online bank, has done the same with its mortgages.

  • Bankia has added a new price step in its fixed mortgages. If you have a salary higher than € 3,000, you can hire it from 1.50% to 10 years to 2.50% NIT to 25 years. No commissions or links!

Ranking of the best fixed-rate mortgages updated to September 2018 and ordered from lowest to highest Annual Equivalent Rate (APR):

 

Best fixed rate mortgages (September 2018)

Name and Bank

NIT

APR

Term

Links

Mortgages with a maximum term of 30 years

Fixed Mortgage OpenBank

2,25%

2,59%

25 years

Payroll

Fixed Mortgage Bankoa

2,25%

2,84%

25 years

Average link

Mortgage Without Commissions Bankia

2,25%

2,69%

25 years

Payroll + 3.000€

2,50%

2,94%

25 years

Payroll + 1.800€

Fixed Mortgage Kutxabank

2,50%

3,08%

25 years

High

Fixed Mortgage Bankinter

2,20%

3,06%

25 years

High

Fixed Mortgage BBVA

2,25%

3,16%

25 years

Average link

Fixed Mortgage AHORA Liberbank

2,15%

3,34%

25 years

High

Fixed Mortgage 25 years hipotecas.com

2,90%

3,33%

25 years

Fixed Mortgage Santander

Average link

Mortgage MariCarmen Abanca

2,45%

4,11%

25 years

High

Mortgages with a term of 20 years

Fixed Mortgage TARGOBANK

1,90%

2,55%

20 years

Average link

Fixed Mortgage Coinc

1,99%

2,58%

20 years

Fixed Mortgage Estrella 20 Caixabank

2,35%

3,55%

20 years

Very High

 

Leave a Reply

Your email address will not be published. Required fields are marked *