Comparison of mortgages in Spain – September 2024

In 2024, the Spanish mortgage market offers a variety of financing options for purchasing real estate. For example, Banco Sabadell offers a fixed-rate mortgage with an interest rate of 2.60%, Unicaja offers a variable-rate mortgage with an initial interest rate of 1.99%, and Cajamar offers a mixed mortgage with an initial interest rate of 1.79% for the first 5 years.

Choosing the right mortgage is one of the most important financial decisions facing prospective property owners. This decision has long-term consequences, affecting monthly financial obligations. The cost of a loan, despite the same amount, can also differ by even tens of thousands of Euros in the case of choosing an offer on unfavorable terms.

Spain, thanks to a stable real estate market and attractive bank offers, is becoming an increasingly popular place to buy property for both residents and foreigners. As the market becomes more and more competitive, mortgage offers are becoming more diverse. There are less and more favorable offers. Check how to get the cheapest mortgage, what factors affect interest rates and what are the total costs associated with taking out a loan. Remember also that obtaining a loan requires a number of documents.

• See also: Documents required to obtain a mortgage

Understanding the differences between different types of mortgages is crucial for making an informed choice of offer. A different type of loan may be more financially beneficial for you than for other people, this depends on, among other things, tax issues and the risk we are able to tolerate. For example, fixed-rate loans offer, as the name says, fixed installments throughout the entire loan period, while variable-rate loans may be more attractive for those who expect interest rates to fall. Mixed loans combine features of both approaches, offering some flexibility for borrowers. This is the equivalent of loans from Poland with fixed interest rates, e.g. for 5 or 10 years.

Analysis of mortgages in Spain: Best offers – September 2024

On the Spanish market in 2024, three main types of mortgages are available: with fixed interest rate, variable interest rate and mixed.
We will compare types of loans and consider how to get the most favorable offer on the market.

Fixed-rate mortgages in Spain

Fixed-rate mortgages offer unchanged mortgage interest rates throughout the entire loan period. This means that monthly installments will remain the same, which gives borrowers certainty and financial stability. A fixed loan is understood differently than in Poland. Where colloquially speaking of a loan with a fixed rate, we are actually talking about a “mixed” loan.
Table comparing interest rates in banks, fixed-rate loans.

*Sources: Kelisto.es with data from financial institution websites (analysis prepared on 02/09/2024)

APR – Annual Percentage Rate
TIN – Nominal Interest Rate

Advantages:

• Financial stability: The installment remains unchanged throughout the entire loan period.
• Budget certainty: Possibility of better long-term planning.

Disadvantages:

• Usually higher interest rates than variable-rate loans.
• Less flexible conditions regarding early repayment and refinancing.

Variable-rate mortgages in Spain

Variable-rate mortgages have interest rates that change depending on market indicators, such as Euribor. This is a popular choice for those who are willing to take some risk in exchange for potentially lower costs. In Poland, these are classic mortgages based on WIBOR and bank margin.
Table comparing interest rates in banks, variable-rate loans.

Advantages:

• Potentially lower costs in the initial loan period.
• Ability to benefit from interest rate reductions.

Disadvantages:

• Risk of interest rate increases, which can lead to higher monthly installments.
• Difficulty in predicting future loan costs.

Mixed mortgages

Mixed mortgages combine elements of fixed-rate and variable-rate mortgages. They usually start with a fixed interest rate period, followed by a variable interest rate period.
Table comparing interest rates in banks, mixed-rate loans.

Advantages:

• Initial period of stability thanks to fixed interest rate.
• Ability to benefit from lower variable rates in the later loan period.

Disadvantages:

• Complicated loan structure.
• Possibly higher costs in the initial period compared to variable-rate mortgages.

How to get a low total mortgage cost

To get the most favorable mortgage in Spain:

• Compare offers: Use online tools to compare available mortgage offers from different Spanish banks. Comparing a wide range of options is key to finding the most favorable offer.
• Negotiate terms: During meetings with bank representatives, negotiate interest rates, commissions and other costs related to the loan. Spanish banks can offer flexibility in negotiations, especially when you have equity in mind.
• Check your creditworthiness: The better your creditworthiness, the more favorable conditions you can get. Make sure to pay other obligations on time to improve your credit score.
• Use support programs: Some banks offer special programs for young buyers, single parents or eco-friendly properties. Check if you qualify for such programs.
• Avoid unnecessary additional products: Banks often require purchasing additional financial products, such as insurance or savings accounts. Carefully analyze which of them are actually necessary and negotiate the terms.
• Monitor the financial market: Stay up to date with current trends in the financial market and changes in monetary policy that may affect interest rates. Knowledge of current market conditions is crucial to make an informed decision.

Total mortgage cost by example

To better understand what the total cost of a mortgage in Spain can be, let’s consider an example of a fixed-rate mortgage for 150,000 EUR at 2.60% interest for 30 years.
Calculations:

• Monthly installment: 600.96 EUR
• Total loan cost: 600.96 EUR x 360 months = 216,345.60 EUR

Cost table using the example of a loan from Banco Sabadell:

Conclusions regarding mortgages in Spain

Choosing the right mortgage for buying property in Spain in 2024 requires careful thought and analysis of available offers. Fixed-rate mortgages offer stability and certainty, but are often more expensive. Variable-rate mortgages can be cheaper in the short term, but carry risks associated with changing interest rates. Mixed mortgages try to combine the best features of both types, offering initial stability and then flexibility.
We encourage you to carefully compare offers from different banks and consult with financial advisors to find a solution best suited to your financial situation. Remember that the most important thing is not only to choose a mortgage with the lowest interest rate, but also to understand all the terms and obligations associated with it. This way you will avoid unpleasant surprises and will be able to enjoy your new home without unnecessary financial stress. Obtaining a loan is a complicated process, but with the right approach you can find an offer that will suit your needs and capabilities.