A few years ago the range of mortgages available in Spain was relatively limited - however the rate of interest was also low so this was not such an issue.
However, over the last couple of years, the alarming increase in mortgage rates appears to have helped speed up the introduction of a variety of new mortgages such as: multi-currency mortgages, 50 years mortgages and long term interest-only mortgages to name but a few.
While beneficial to consumers, it also makes choosing a mortgage more difficult.
Assuming you fulfill the basic criteria required, you then have to decide which of the myriad of interest rates and conditions are best for your circumstances.
Researching all of the offers available can be a daunting and time-consuming task.
Not t0 mention the little problem of the language barrier.
Financial jargon can be difficult to understand in your own language, let alone in a second language.
You can of course go to a mortgage broker, who will give you the benefit of their knowledge of the different banks.
However, they are likely to be limited to a handful of banks with which they have a financial arrangement.
An independent advisor is more likely to consider the offers from a wider range of institutions.
Once they have found a selection of offers you are eligible for, you must now decide which one to choose.
The obvious answer would seem to be the one with the lowest interest rate, or the lowest monthly payment.
But as in many areas of life, the cheapest is not always the best.
Let us take as an example that bank A quotes you EUR500 per month and bank B quotes you EUR575 euros per month.
The obvious choice would seem to be bank A.
However, what you must be sure to ask if what is associated with the mortgage offer.
For example, many banks offer lower rates only if you also take out a pension plan, home insurance and life insurance.
Add just the pension for two peopleto the quote and you are paying suddenly EUR600, instead of EUR500.
Granted, a pension is an investment, but apart from the fact that the tax office may take up to 40% of the fund when you retire, many expats are likely to already have pensions or savings plans in place.
Do you really need another one?Particularly when the idea is to achieve the lowest monthly outgoings possible? On to house insurance.
Again, a beneficial policy as you want to be covered if anything happens to the house.
But how do you know your bank is going to offer you the best and most comprehensive cover for your money? And then there is life insurance.
If you already have it, you do not necessarily need any more.
If you do not have it, life insurance can offer you peace of mind for your loved ones should anything happen to you.
But thinking purely in financial terms, one very famous international bank charged 10 years worth of premiums to a recent customer.
10 years of premiums in advance amounts to over EUR7000!Added of course to the loan, increasing the monthly payment as well as charging interest on this amount for the next 10 years.
In conclusion, there are several key questions you need to askbefore choosing your mortgage provider: What is the interest rate if you do not take out any other products? What is the true monthly repayment amount if you include the extra products required for the mortgage? What is the set up or arrangement fee? What are the fees for making overpayments? What are the cancellation fees? Is life insurance required? Is house and buildings insurance required? Are pension products required? And above all remember that you have consumer rights with any policy that you take out.
If you are not happy with any policy, check the document wording carefully to find out how many days you have to cancel the policy.