Living in Mallorca is a dream, but getting the mortgage can be more complex than we think. This is an administrative process that can become a little longer than expected, and that is why today we will help you with tips to find the ideal mortgage in Mallorca for you.
So, if you have doubts about which type of mortgage is the most convenient for you, what is the term that best suits your needs, how much you can be granted, and you want to know some tricks to make the perfect investment, here we tell you absolutely everything.
Negotiate interest rates
If you want to get a good mortgage, you will have to negotiate. Generally, the current mortgage interest rate is 3.75%, but not all banks charge the same. There are banks that can give you a lower percentage, although now banks are raising interest rates, so you should be very attentive.
The truth is that each entity will have different parameters and different opportunities for its clients. The point is that you should analyze all of them to determine which one is right for you depending on your budget and life project.
Choose the best bank
First, you should ask the banks in Mallorca about mortgages. The best thing to do is to look for several options, so you can compare which one works best for you. And if you do not know where to start, a good option may be to get advisors to guide you through the process.
You should take into account the conditions they offer you, the interest rates, the payment facilities and how fast they can process your applications. Not to mention the percentage of the mortgage they will give you.
What mortgage interest rate is best for me?
The mortgage interest is the amount that the bank will charge you for lending you the money. Imagine that the property costs 200,000 euros, so you have been given a mortgage of 60%. Then, that 60% you will have to return to the bank plus the percentage of interest that has been fixed.
Now, mortgage loans can have three types of interest rates, which are fixed, variable and mixed, and we will explain more about this below:
Fixed interest
If you choose this interest rate, the amount you pay will be the same today as the last month of the mortgage. These types of mortgages are good for long-term borrowers. Because if you buy today, the amount you will have to pay in 10 years will be much easier to cover.
Variable interest
In the case of variable interest, the amount to be paid is not fixed. It can go up or down depending on how the reference index, which is the Euribor, goes. This option may be appropriate when a mortgage is requested that will be repaid in a short period of time, especially with terms equal to or less than 10 years.
The positive thing about this interest rate is that if the Euribor goes down, the amount to be paid will be lower, but if it goes up, it will also be higher. So it is a very changeable issue and could be as beneficial as it is problematic.
Mixed interest
In the case of mixed interest, it is a mixture of the two previous types. First, a fixed interest rate will be charged, and then a variable rate will be charged. From what moment this happens, it must be negotiated, and thus the payment of the installments can be well planned.
How much term would you give me on a mortgage in Mallorca?
The term of the mortgage is one of the things that most concern future buyers in Mallorca. What is important in this aspect, is that there are two elements that can generate significant changes in the term of a Mallorca mortage, and they are the age of the applicant and the amortization term.
In the first instance, the term you are granted may depend on the bank. The maximum they can give is about 30 years, but this is not in all cases. The highest age allowed to apply for a mortgage is 75 years old, although there are some banks that only allow up to 70 years old. And in that case they will only give you a term of 15 years to make the total payment of the mortgage.
So, the younger you are, the more likely you are to get a mortgage with a longer repayment term. But keep in mind that the term will vary depending on the bank, so it’s best to go and make an inquiry.
How much percentage of the mortgage can the bank give me?
In most cases, the maximum percentage granted by the banks is 80% of the value of the house. For example, if the house costs 200,000 euros, they will only give you 80% of that amount, which is what you must return to the bank together with the interest percentage.
There are specific cases in Mallorca where a higher percentage of mortgage can be obtained. In ideal conditions it could be up to 100%, but if it is higher than 80% it is quite valid. But not all clients can access this benefit.
Now, we can assume that the client can access the maximum mortgage which is 80%. This means that the applicant must have saved the remaining 20% that must come out of his pocket. And this is not the only thing, because there are also between 10 and 15% of extra expenses for notary procedures, taxes and more.
Then, it is estimated that it is necessary to collect at least 35% of the cost of the property you want to buy. Thus, you can cover the amount that does not pay the bank’s mortgage, and pay the rest of the formalities.
But there is something important to take into account, and that is that the average mortgage in Spain usually covers only 64% of the property. This means that the amount to save will be higher. But this will depend on each client. There are applicants who have an excellent credit history and good income and will be able to obtain a larger mortgage.
