Mortgage in Spain 2024

Mortgage lending in Spain in 2024: key aspects

Spain's leading banking institutions are actively working to attract new customers by developing targeted mortgage programs. They provide attractive conditions for the purchase of primary housing. Some banks have provided special offers for young people.

The terms of mortgage lending differ depending on the bank and the type of interest rate chosen: floating, fixed or combined. Mortgage interest rates are closely related to the Euribor indicator, making the mortgage market dynamic.

Interest Rates Overview

Floating interest rates

Floating rates are usually adjusted according to the Euribor (European Interbank Lending Rate), which causes them to vary depending on market conditions. This option can be beneficial when rates are reduced, but it increases the risks for borrowers when they rise. Spanish banks often provide mortgages with floating rates, for a period of up to 35 years or more, At the same time, the age of the borrower at the end of payments should not exceed 80 years.

Fixed interest rates

Fixed rates provide borrowers with the stability of payments for the entire loan period, eliminating the risk of changes in interest rates. This provides borrowers with confidence in their financial obligations. Fixed rate loans are usually issued for up to 30 years.

Combined interest rates

Combined rates include elements of both floating and fixed rates, starting with a fixed rate at the initial stage of lending, and then moving to a floating rate. This provides borrowers with a balance between the initial stability of payments and the possible benefits of lower rates in the long term.

Additional important conditions

In addition to interest rates, when choosing a mortgage product, it is necessary to take into account the terms of financing, the size of the down payment and possible benefits. Some banking institutions offer special conditions for the purchase of a first home, including low interest rates, extended loan terms, and reduced down payment requirements. Usually, banks finance 70-80% of the transaction value excluding taxes and fees, but when buying a home directly from the bank, 100% financing can be provided.

Researching the different types of interest rates and conditions offered by the leading banks in Spain will help potential borrowers choose the most suitable and profitable financial solution that suits their personal needs.

Preliminary assessment

Most major Spanish banks provide mortgage settlement tools on their websites, allowing potential customers to evaluate different lending conditions. Many banks offer bonus programs that reduce the interest rate when buying additional financial products or services, such as pension plans, insurance, credit cards, linking income and payments to an account, installing an alarm system, etc. Sometimes such programs can reduce the rate by 1% or more.

Mortgage credit terms usually include parameters such as TIN, TAE. TAE (Tasa Anual Equivalente) reflects the total cost of a mortgage for the year, including all additional costs such as commissions, fees, and insurance. These costs, while increasing the cost of a mortgage in the first year, do not affect subsequent periods. TIN (Tipo de Interés Nominal) is  the net interest rate on the loan without taking into account additional costs. This rate can be fixed for the entire period of mortgage lending or floating, regularly revised depending on the terms of the agreement.

Variable interest rate mortgages are linked to EURIBOR and the addition of interest margin (Euribor + X%). So, EURIBOR fluctuations directly affect the amount of monthly mortgage payments, which can be profitable, but also carries risks for the borrower. An increase in EURIBOR will increase payments, while a decrease in it will reduce the cost of borrowing. The revised rates are revised every six months or once a year.

Mortgage rates of the leading bank in Spain

Banco Santander maintains a leading position in the Spanish financial market thanks to its wide range of mortgage products. The bank offers various types of interest rates and additional bonuses for using its banking services - up to 1.10%. The most attractive conditions are provided when applying for a loan remotely.

Mortgage terms and conditions at Banco Santander for 2024:

- Acquisition of a primary residence: a loan for up to 30 years in the amount of up to 80% of the appraised value of the property.

- Purchase of secondary or subsequent housing: a loan for up to 25 years in the amount of up to 70% of the appraised value.

- In both cases, by the time of the final repayment of the loan, the borrower must not exceed 80 years of age.

- Mortgage issuance fee: 0%

Variable Rate Mortgage Products in Banco Santander 2024:

- Without preferential program: 1.89% in the first six months, then Euribor + 1.89% from the seventh month (Total annual cost of the loan 5.74%).

- With a maximum discount: 1.89% for the initial six months and Euribor + 0.79% from the seventh month (Total annual cost of the loan 5.00%).

Fixed Rate Mortgage Products in Banco Santander for 2024:

- No benefits: 2.90% for the initial six months and 3.90% from the seventh month (Total annual cost of the loan 4.10%).

- With the maximum benefit: 2.90% for the first six months and 2.80% from the seventh month (Total annual cost of the loan 3.39%).

Blended Interest Rate Mortgage Products in Banco Santander for 2024:

- With the transition from a fixed to a variable rate after 9.5 years:

1. No exemptions: 2.80% for the first six months, 3.80% from the seventh month for 9 years, and Euribor + 1.89% from the 10th year (Total annual cost of the loan 4.73%).
2. With the maximum benefit: 2.80% for the first six months, 2.70% from the seventh month for 9 years, and Euribor + 0.79% from the 10th year (Total annual cost of the loan 4.02%).

- With a transition after 2.5 years:

1. No benefits: 2.60% for the first six months, 3.60% from the seventh month for 2 years, and Euribor + 1.97% from the 3rd year (Total annual cost of the loan 5.50%).
2. With the maximum benefit: 2.60% for the first six months, 2.50% from the seventh month for 2 years, and Euribor + 0.87% from the 3rd year (Total annual cost of the loan 4.78%).

Mortgage offers for young people in Banco Santander for 2024:

- Age limit: up to 35 years old at the time of loan registration.

- Financing amount: up to 95% of the minimum of the transaction value or the appraised value of the property.

- Loan term: up to 30 years.

- Ability to choose an interest rate at the discretion of the borrower.

Which mortgage lending conditions are more profitable in Spain

At a time when the Euribor indicator was at or slightly above the negative level, variable-rate mortgages were the preferred option. But nowadays, many borrowers are looking for fixed-interest mortgage deals.

With the current economic volatility, a fixed mortgage rate brings borrowers a sense of stability and the ability to accurately predict their expenses. Unlike variable rates, which change according to fluctuations in Euribor and are reviewed on a regular basis, the fixed rate remains the same throughout the loan period. This allows borrowers to accurately plan their finances for a long period.

On the other hand, banks in Spain, guided by their own interests, prefer to issue mortgages with a variable interest rate. This approach allows financial institutions to adjust to economic changes and minimize risks in the event of a potential increase in interest rates. In the case of a fixed rate, the bank fixes the interest for the entire loan period, which can reduce its profitability when market rates rise.

Due to the difference in interests, banks set stricter criteria for fixed-rate mortgages, expecting borrowers to prove high income and stable employment (e.g., long service in one place, the presence of a non-fixed-term employment contract, etc.). Mortgage lending is especially difficult for entrepreneurs in Spain, as it is often difficult for them to confirm their financial reliability.

However, each mortgage application is considered individually. In addition, borrowers should be aware that existing legislation gives them the right to initiate subrogation – the process of changing banks to improve lending conditions.

Please note that our experts are always ready to provide advice on the purchase of real estate with a mortgage in Spain and help you choose the most favorable mortgage lending conditions that meet your needs.

Terms 

Euribor is an abbreviation for the English Euro Interbank Offered Rate. This is the interbank interest rate, which is calculated daily by averaging the interest rates of the most active European banks.