Mallorca Property loans and Mortages
Getting a property loan or mortgage in Mallorca.
Mallorca property loans and mortgages in the perfect climate.
Is it cheaper than ever to finance Mallorca property loans and mortgages?
The eurozone base rates ended 2015 on all all time low, in fact they ended 2015 at the lowest rate on record and aren't set to rise anytime soon. But they will rise again eventually. Understanding what this mean to you; can you now finance a property in Mallorca, can you secure a bank loan and how do you calculate your mortgage payments and interest rates, what is the Euribor? These are the questions we want to address for you.
Mallorca property loans and mortgages - What is the Euribor and how does it affect mortgages?
Euribor is short for Euro Interbank Offered Rate. The euribor rates are based on the average interest rates European banks borrow funds and provide short term loans to one another and are considered to be the most important reference rates in the European money market. Euribor is the purchase price a bank has to pay for a short term loan. There are different maturities, ranging from one week to one year and they provide the basis for the price and interest rates of all kinds of financial products like mortgages.
Mallorca property loans and mortgages - Euribor rates.
Current Euribor rates are as follows:Current Euribor rates.
| 1 month
| 3 months
| 6 months
| 12 months
In Spain the interest rate which has to be paid for a short term loan or mortgage follow the Euribor rate. When the Euribor rate increases, the interest on your mortgage increases too.Mallorca property loans and mortgages - Interest rates.
When you decide on a mortgage based upon an adjustable interest rate (also known as a floating rate or variable rate mortgage), it is announced beforehand that you will pay the Euribor-rate (in Spain the Euribor 12 month rate is used to calculate most mortgage repayments) plus a fixed commission, for example Euribor +1%.
Mallorca property loans and mortgages - Euribor at all time low.
The Euribor rate is now at an all time low. It ended 2015 at 0.059%, the lowest rate on record, and was down by 82% compared to the year before. On a monthly basis the Euribor was down 25%.
While interest rates are at an all time low and have remained stable over the past 2 years, they have begun to rise and the Spanish Mortgage Asociation (AHE) has shown concern that they will continue to rise, thus affecting the variable interest rate on mortgage repayments.
Mallorca property loans and mortgages - What it means to you.
This means that the cost of borrowing to buy property in Spain is considerably reduced, in the short term.
It is worth noting however that interest rates were much higher before Spain joined the Euro, commonly above 10%, but since June 2012 the Euribor has been below 1% and it is not expected to rise any time soon.
Mortgages, hipotecas in Spanish, can be arranged by most Spanish banks, foreign banks in Spain and overseas banks, with record numbers of property loans and mortgages arranged in the last few years. You can get a property loans or mortgage to buy a house in Mallorca whether you are a resident or not and the average amount borrowed is 120,000 Euros.
Mallorca property loans and mortgages - How much can I borrow?
How much you can borrow for your Mallorca property loan or mortgage will depend on a a variety of factors; your income, your profession, marital status, whether you are an employee or self employed, if your spouse works, etc.and most mortgages will have a maximum lending limit based upon your income.
As a resident in Mallorca you can get up to 80%, while non residents can borrow up to 60% only, and there are no self-assessment mortgages. If you are told there are, check with your lawyer.
In 2006 variable interest rates were around the 4% mark and Spanish and Mallorca property loans and mortgages have been the most competitive in Europe since then. Most, in fact around 90% of property loans and mortgages in Spain have variable rather than fixed interest rate at 1-2% above base or Euribor.