Are you thinking about buying a house? In this guide, you'll find the most commonly used types of mortgages—from fixed or variable to mixed and those with public assistance. Learn to interpret the TIN and APR, calculate the total cost of the loan, and understand the conditions imposed by banks. We also explain the step-by-step process for applying for a mortgage, what documentation you need, and how to improve your chances of approval.
Understanding Mortgage Types in Spain
In Spain, mortgage financing is the most common way to acquire a home. Most banks offer products tailored to the applicant's profile: employees, self-employed individuals, young people, residents, or foreigners. Mortgages are usually signed for 20 or 30 years and can be referenced to the Euribor or have a fixed interest rate.
Main Types of Mortgages in Spain
Fixed-rate mortgage: The monthly payment does not change throughout the loan's life. Ideal for those seeking stability and predictability.
Variable-rate mortgage: Referenced to the Euribor plus a margin. It may start with lower payments but involves risk if the index rises.
Mixed mortgage: Starts with a fixed rate for the initial years and then switches to a variable rate. Offers a combination of security and flexibility.
Young mortgage: Some entities offer special conditions for those under 35, like longer terms or discounted interest rates.
Mortgages with public assistance: In some cases, regional or local authorities offer direct aid or guarantees to facilitate access to housing.
The fixed rate has become popular in recent years due to the drop in the Euribor. Variable mortgages can be more economical initially but require risk tolerance. Mixed ones are a highly valued intermediate option. Also, inform yourself about the conditions for non-residents if purchasing from abroad.
Basic Conditions for Accessing a Mortgage
It is common to provide between 20% and 30% of the property's value. Solvency, stable employment, a positive credit history, and a property free of encumbrances are required. Additionally, you must cover the costs of appraisal, notary, registration, and taxes (AJD, ITP, or IVA, as applicable).
How to Compare Mortgage Offers
Comparing mortgages requires analyzing beyond the initial interest rate. The key is to review the total cost of the loan over time and ensure that the conditions match your financial situation.
Key Aspects When Comparing Mortgages
APR (Annual Percentage Rate): Reflects the real cost of the loan including interest, fees, and mandatory expenses.
Nominal Interest Rate (NIR): This is the "pure" rate, excluding additional costs. It's not sufficient on its own to make a decision.
Fees: Opening, early repayment, subrogation, or cancellation. Check if they are reduced or waived.
Linked Products: Many banks require purchasing insurance, credit cards, or direct depositing salaries to maintain advantageous conditions.
Flexibility: Check if it allows partial repayments without penalty or changes in the term.
Use simulators like those from financial institutions or online mortgage comparison tools. Always read the Pre-Contractual Information Sheet before signing anything. If uncertain, consult a financial advisor.
Tips for Negotiating Better Conditions
If you have a permanent contract, stable income, and good savings, you can negotiate a better margin or eliminate fees. Compare at least three banks, present competing offers, and ask about current promotions. Banks value solvent profiles and long-term relationships.
Some institutions offer discounts if you purchase insurance through them or direct deposit your income. Take advantage if you can access assistance for young people, large families, or protected housing.
How to Apply for a Mortgage
The mortgage application process involves several phases and mandatory documentation. With good preparation, you can speed up the process and improve your conditions.
Steps to Apply for a Mortgage
Preliminary study: Simulate your borrowing capacity and calculate how much you can provide as a down payment.
Gather documentation: ID, employment contract, latest pay stubs, tax return, employment history, and bank statements.
Property appraisal: It must be conducted by an appraiser approved by the central bank. It's mandatory to process the mortgage.
Sign the binding offer: The bank issues a Standard European Consumer Credit Information (SECCI) document that you must accept at least 10 days before signing.
Sign before a notary: The mortgage and the purchase are formalized. The notary must ensure you understand the conditions.
From the time you submit the documentation until the signing, it can take between 3 and 6 weeks. During this time, avoid new loans or job changes. Be prepared with between 10% and 15% of the property value for additional expenses.
Recommendations for Smooth Approval
Maintain a good financial history, pay your debts on time, and avoid overdrafts. If you're self-employed, prepare your quarterly, annual returns, and forms. If it's complex, consult a management or mortgage broker.
