# Barcelona Mortgage Questions



## Tapas (Jul 13, 2012)

Hi there!

I am newbie, so please do not throw too many stones  I have some plans to move to this wonderful city and in case I like it, I am going to get a mortgage for a flat.

Now, some important questions appear and I would be very grateful if you could help me with them..

1) What is the average square meter price for a nice 2 bedroom apartment in a quiet and safe area (let's say in ~5-6 km zone from Ramblas). With no need to make a huge renovation. I searched for prices and examples, but they differ a lot depending on the areas and I am not good in determining, whether area is safe and relatively quiet  

2) Current approx. interest rate for a skilled employee with ~40 000 gross a year salary? Is it linked to the 6-month-Euribor? 

3) Maximum and recommended % of loan (from the total property price)?

4) Is loan backed up by the property? In many countries, if you can't pay, then property will be taken away - if sell price is higher than left debt, you'll get the difference, if lower, you lose property, of course, but do not have to pay anything more on top.

5) is it possible to pay mortagage quicker than planned? If, say, I win Euromillions lottery or it turns to be that I have a wealthy grandpa  Any restrictions and fees for that? I know it can depend on bank, but in overall?

6) Any additional big taxes or fees I have to pay when taking mortgage to live (not to invest).

Thanks in advance!


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## xabiaxica (Jun 23, 2009)

Tapas said:


> Hi there!
> 
> I am newbie, so please do not throw too many stones  I have some plans to move to this wonderful city and in case I like it, I am going to get a mortgage for a flat.
> 
> ...


I don't know the answer to any of your questions - after nearly 9 years here I'm a happy renter!!

:welcome: though - & I'm sure at some stage someone will answer some of yuor questions at least


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## Tapas (Jul 13, 2012)

Thanks anyway!  First tme I will rent, of course, so probably, you can help me with rent related stuff later


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## NickZ (Jun 26, 2009)

Doesn't Spain still have recourse loans? If they do that means if you don't pay and the house sells for less then the remaining loan you're on the hook.

IIRC the government made some changes last year. This puts some limits on the amount of the recourse but you can't just walk away.

I think some of your other questions are highly subjective.


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## Tapas (Jul 13, 2012)

NickZ said:


> Doesn't Spain still have recourse loans? If they do that means if you don't pay and the house sells for less then the remaining loan you're on the hook.
> 
> IIRC the government made some changes last year. This puts some limits on the amount of the recourse but you can't just walk away.
> 
> I think some of your other questions are highly subjective.


Hi Nick

Thanks! This sounds pretty crazy - you lose your home and still owe money.. 

For now, the most important questions are 4) and 5)..


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## jojo (Sep 20, 2007)

All I know is that since the crisis banks have become very fearful of lending money, especially to foreigners and those without large deposits. You really need to check out the rules and regs by phoning a few banks/brokers and getting an idea of how the industry is dealing with things these days, especially the negative equity issue since house prices in Spain are still falling

jo xxx


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## NickZ (Jun 26, 2009)

Immigrant cleaner leads revolt against Spanish mortgage trap | World news | The Observer

I think the government eased the rules a little after this article was written but it gives you an idea.


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## jojo (Sep 20, 2007)

Tapas said:


> Thanks! This sounds pretty crazy - you lose your home and still owe money..


 Tis how it is in the UK. Negative equity. you buy a house and the price falls below the size of the mortgage - you sell it and still owe the bank!!

Jo xxx


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## Tapas (Jul 13, 2012)

Anyone?  Should contact Spanish banks then...


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## thrax (Nov 13, 2008)

As far as I know, and at least in this area, 100% and even 125% loans are still available, although with house prices refusing to go down to the levels where they are realistic I certainly wouldn't be tempted into buyi9ng right now. Rent for 2 - 5 years which will give you two important pieces of information; firstly, do you really want to live in Spain and secondly, if you do, have you found the right area....


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## Tapas (Jul 13, 2012)

Sure, I wanted to rent for a while, but wanted to check beforehand, what dangers can be there..

What's realistic price in your opinion? 30% down? 50%?


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## NickZ (Jun 26, 2009)

You're asking about a personal financial issue.

You may have enough money to pay cash but decide to get a loan for various reasons.

Or you might find the bank will only lend you a certain amount. 

Any number a person here gives you is worth what you're paying for it. 

IMHO the first issue is can you pay the mortgage in a fairly bad situation? If you lose your job how many months can you pay the mortgage? The riskier your income is the more important this is.


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## Tapas (Jul 13, 2012)

Nick

That's true! And this is why I am asking regarding "if it is possible to pay mortgage in advance with some amounts of cash?". 
Initially, I would like to set up monthly payments quite low, so that if I lose job or something, then I am able to pay them for some time. But in case everything is ok, I would like to have opportunity to gradually pay more (say, some relatively big amount of savings every year) to make my debt smaller and smaller..


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## thrax (Nov 13, 2008)

You can get interest only mortgages here which lower the cost per month but you don't pay anything off the capital. Obviously it's for you to decide what's best for your circumstances, but if you do suddenly find yourself in a tricky financial situation and you have bought a house, one thing for certain is that you will find it incredibly hard to sell. That's why so many of us on here continue to rent. We've been lucky in that the second house we found ticks nearly all the boxes and our landlord appears to be a kind, generous and honest man which doesn't happen that often. We plan, at the moment to stay put in this villa for another 4 or 5 years, but should something unforeseen happen it's so easy to move from rented accommodation.

As the sign on a medium's shop door said, Closed due to unforeseen circumstances....


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## Tapas (Jul 13, 2012)

Thanks!
By making payments lower I meant not "interest only" but making period longer. And then add addtional money each year to convert this period to be as short as possible. This is the question - whether local banks accept that or not.. At least in some EU countries they legally cannot deny person's will to make dept (and therefore interest) smaller.

Renting is safer, true.. Though it is hard to accept the truth that while you rent you probably pay off someone's mortgage on this apartment  He gets flat and you get nothing afterwards


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## NickZ (Jun 26, 2009)

I glanced at the Santandar website. They claim max of 80% for residents. 70% for non residents. The percentages are based on the lower of purchase price or the appraisal. 

They have a special mortgage if you buy one of the bank owned homes but they don't say what the limit is.

I didn't notice if they let you prepay. They do mention the mortgage should be within 30-40% of income.

Obviously this is only one bank and I can't imagine all the providers are exactly a like.


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## thrax (Nov 13, 2008)

I have no idea whether or not this is still the cse, but a few years ago it was quite normal to have 40 or 50 year mortgages here and also you could will the mortgage to offspring or relatives in the event of your demise. We have Spanish friends who have such mortgages and one has a mortgage left to him in a will, so he just moved in and carried on with the repayments. Not sure if I ever came across anything like that in Blighty


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## Tapas (Jul 13, 2012)

Thank you Nick for help. 
30% of income is ok. Regarding prepay - banks usually do not disclose it as it they do not like it I guess. I just thought maybe someone here has a mortgage himself and can shed some light from his direct experience and bank contract..


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## Tapas (Jul 13, 2012)

*thrax*, 50 years - wow  I was thinking about 20-25 with the possibility to pay it in around 10-15 (with prepayments) - if salary is what I expect.


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## thrax (Nov 13, 2008)

You would have to check it out with the banks and other lenders here. I would avoid any of the major banks as they have a habit of repossession for the slightest error. I recall a mortgage I had in UK and I attempted to repay some of it early but to do that I had to remortgage which I found odd. Well we tried but our application was turned down. We applied for a remortgage quite separately and that was accepted. Never got to grips with that one...


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## NickZ (Jun 26, 2009)

thrax said:


> I have no idea whether or not this is still the cse, but a few years ago it was quite normal to have 40 or 50 year mortgages here and also you could will the mortgage to offspring or relatives in the event of your demise. We have Spanish friends who have such mortgages and one has a mortgage left to him in a will, so he just moved in and carried on with the repayments. Not sure if I ever came across anything like that in Blighty


In Canada it used to be common for mortgages to belong to the house. So if you sold it or otherwise disposed of it the new owner got the house and the mortgage. This was a selling point in the 70s when mortgage rates weren't much less then 20% but some homes still had mortgages from the 1950/60s that had rates of 5-6%.

But these days almost nobody provides a mortgage longer then seven years.


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## NickZ (Jun 26, 2009)

BTW I've seen some homes offered on Spanish websites for low prices that require you to take over the mortgage and pay it.


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## thrax (Nov 13, 2008)

NickZ said:


> BTW I've seen some homes offered on Spanish websites for low prices that require you to take over the mortgage and pay it.


Then clearly those types of mortgage still exist. In Canada no more than 7 years???? Wow, the repayments will be incredible


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## Tapas (Jul 13, 2012)

thrax said:


> You would have to check it out with the banks and other lenders here. I would avoid any of the major banks as they have a habit of repossession for the slightest error. I recall a mortgage I had in UK and I attempted to repay some of it early but to do that I had to remortgage which I found odd. Well we tried but our application was turned down. We applied for a remortgage quite separately and that was accepted. Never got to grips with that one...


Weird behaviour.. If they repossess, then they need to sell it. By selling many of such houses, they make overall prices lower and lower, which is not good for banks.. Hm!

7 years - this is only for upper-class folks as repayments will be quite high...


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## NickZ (Jun 26, 2009)

thrax said:


> Then clearly those types of mortgage still exist. In Canada no more than 7 years???? Wow, the repayments will be incredible


You just get a replacement mortgage. Some people get a new one every six months. Would drive me crazy but it made sense when rates were going down every day.


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## jojo (Sep 20, 2007)

NickZ said:


> You just get a replacement mortgage. Some people get a new one every six months. Would drive me crazy but it made sense when rates were going down every day.



Oh yes and just how cheap and easy would that be. The admin costs, the survey costs, the "this and that" costs - not to mention you'd probably be getting this replacement mortgage on a property thats losing value - so you'd end up buying your house from yourself at an inflated price????


Jo xxx


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## NickZ (Jun 26, 2009)

Obviously you're speculating interest rates are going lower. When you consider how high the average mortgage principal is having the rate go down even 0.25% more then pays the fees.


It's not the sort of speculation that appeals to me but during the last 30 years the interest rates have gone down from around 18% to less then 3%


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## jojo (Sep 20, 2007)

NickZ said:


> Obviously you're speculating interest rates are going lower. When you consider how high the average mortgage principal is having the rate go down even 0.25% more then pays the fees.
> 
> 
> It's not the sort of speculation that appeals to me but during the last 30 years the interest rates have gone down from around 18% to less then 3%


 But you're also looking at having to pay out a minimum of 10% of the property value every six months - not to mention exchange rates etc - it was this sort of speculation that triggered the whole sub prime banking fiasco. It all works great until someone at the back whispers (what if...)

Jo xxx


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## Tapas (Jul 13, 2012)

Some mortgage agreements already have the point, stating that "interest is calculated every x month" (if it is linked to Euribor, for example), meaning that interest rate and repayments float up and down without any agreement change..


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## NickZ (Jun 26, 2009)

jojo said:


> But you're also looking at having to pay out a minimum of 10% of the property value every six months - not to mention exchange rates etc - it was this sort of speculation that triggered the whole sub prime banking fiasco. It all works great until someone at the back whispers (what if...)
> 
> Jo xxx


I'm not sure what you mean. Those Canadian mortgages are amortized over 25 to 30 years. For awhile even 35 years. So at most over six months you paid out 1/50th.

No exchange rate issues for people working and earning C$

BTW those people weren't subprime. They were almost totally prime borrowers.


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## NickZ (Jun 26, 2009)

Tapas said:


> Some mortgage agreements already have the point, stating that "interest is calculated every x month" (if it is linked to Euribor, for example), meaning that interest rate and repayments float up and down without any agreement change..


Yes but then you can't walk across the street and ask for a better deal. 

I've known people that dealt with every single mortgage provider .


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## NickZ (Jun 26, 2009)

BTW I think I've caused a drift off topic -(


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## jojo (Sep 20, 2007)

NickZ said:


> BTW I think I've caused a drift off topic -(


 I think I helped lol!!! :tape:

Jo xxxx


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## Tapas (Jul 13, 2012)

No problem, since no one can help better on those questions )


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