Mortgages in Spain: Saving Tips
When buying real estate in Spain and deciding to take out a mortgage, the buyer should think about how to reduce the costs of obtaining and repaying the loan. The cost and terms of a mortgage in Spain can vary significantly between banks. In addition, there are some subtleties that will help save on the loan.
It is important to pay attention to the minimum rates offered in various mortgage programs. Recently, many programs offer a condition on a minimum rate. However, in most cases, the rate on mortgage loans is set on the basis of the interbank European rate Euribor, which has been falling for several months in a row. Clients who have a condition on a minimum rate may overpay.
The issue of early loan repayment is also worth discussing. Many borrowers with available funds decide to increase their monthly mortgage payments to pay off the loan faster or even pay it off early. However, before doing this, it is worth carefully reading the terms of the agreement with the bank: some institutions charge a fee for increased payments and early repayment. Sometimes it is more profitable to increase the monthly payment to reduce the loan amount and repay it early with less costs.
Mortgages in Spain: Products
Many mortgage contracts in Spain require the purchase of additional products such as life and property insurance. An analysis of the terms of mortgage contracts in many Spanish banks shows that some programs require the purchase of 5-6 additional products. Many clients, seeking to obtain a loan faster, do not think twice and sign up for this. However, some of these products may be unnecessary or there are cheaper alternatives.
Is it possible to refuse these additional products in the future? To answer this question, you must first study the terms of the mortgage contract. As a rule, the contract stipulates that if the client refuses the product, the interest rate will be increased. The amount of additional interest is individual in each case, so it is important to carefully calculate and evaluate whether this decision will be beneficial in the long term.
Once the loan has been fully repaid, the bank must issue the client a confirmation document called “Certificado de Deuda Cero” – “zero debt certificate”. This document should be free of charge, but some banks charge up to 200 euros for it. Some banks also require the client to cover the costs of preparing this document. It is important for bank clients to know that such documents can also be prepared by notaries at a much more affordable price.
After repaying the loan, the client is advised to cancel all related banking products that are no longer needed or transfer them to a cheaper provider.
