"HipoTeca" "Mortgage" Home Loan in Spain

Hipoteca 

Spanish people call 'Hipoteca' to home loan. https://www.latestfoto.com/p/sp.html?m=1

Hipoteca is very popular in Spain and most people have atleast one hipoteca. 

 

I also have one. 

 

I am going to call it home loan from now. 

In Spain people take loans from banks frequently for paying purchase, travel, beauty and for covering many other costs. 

 

Then they pay their bank loans during whole life. 

Spanish banks provide easily loans. 

 

They ask you for your 6 month salary slips (Nomina) and endorsements (avals). 

In case of the homeloan, Spanish banks ask you to sign on a legal document prepared taking your purchased flat or home as an endorsement. 

In case you fail to pay loan, the loaning bank will take over your flat. 

 

As much as I know the bank can take this action if you fail to pay 3 home loan instalments. 

 

However, you can negotiate with them to get more time for payment telling your actual situation. 

The banks in Spain offer you to contract them for other services such as direct deposit of your salary in their bank from your employer, home insurance, life insurance, pension plans, credit card and many other services. 

Depending on the negociation and as a consequence contracted services, the bank can modify the loan interest rate and can offer high interest on your saving account. 

There are two types of bank loan interest. 

One is on fixed rate i.e. bank will charge same interest rate always independent of european economic situation. 

 

Suppose european economy is down resulting euro rate falls down. 

 

But bank will charge same interest rate that is fixed on your negotiation with bank for terms and conditions of the loan. 

 

In this case interest rate will be always high starting from minimun 2%. 

Homeloan instalment amount = Fixed amount + fixed interest rate negotiated with bank. 

Loan money to pay per month = 1000 euro + 3% of amount. 

Other one depends on the rate of Euribore that is related to european economic situation. 

 

When economic is good, Euribore rate will be high and as a consequence you have to pay more interest rate. 

 

Besides you have to pay interest rate. 

 

Interest rate is normally under 2% on first year of loan. Second year loan interest is normally 0.99%. 

Homeloan instalment amount = Fixed amount + flexible interest rate (interest rate + Euribore rate)

Loan money to pay per month = 1000 euro + (0.99 + Eurobore rate)% of amount. 

Euribore rate is published everyday in european newspaper. Since there is economic crisis at global level, therefore Euribore rate is in negative from many years. 

 

However, it has been agreed legally that Euribore rate will be set at zero in case of bank loan although real Euribore rate decreases and reaches in negative from zero. 

 

Similarly it has been set the higher level of Euribore rate. 

 

As much as I remember it is 5%. 

 

The bank can not ask more than 5% although Euribore rate increases and reaches more than 5% when european economy is good. 

Most of people look for flexible homeloan interest because economy experts have already reported low rates of Euribore for many years. 

 

Currently Euribore rate is set zero for bank home loan. 

 

Do you agree with it? 

 

You can write your comment in comment section. 

For understanding well about Hipoteca or home loan or obtaining loans from any spanish bank, it is recommended to read a home loan guide: https://www.latestfoto.com/p/sp.html?m=1