Understanding Spanish Mortgages

November 03, 2008

Euribor (12 month) is the interest rate most commonly used to calculate mortgage payments in Spain. It is used for both variable and fixed rate mortgages in Spain, though the vast majority of mortgages in Spain are variable rate.

Fundamentally, Euribor is a Euro system interbank lending rate determined by the key interest rate (on main refinancing operations) set by the European Central Bank (ECB).

Basically, in terms that most people would understand, it is the interest rate that the banks used to lend to each other, and it is calculated by adding a risk-premium to the base rate set by the ECB.

So when the base rate goes up, so does Euribor, which in turn pushes up the variable mortgage interest rates in the Euro-zone. Most Spanish mortgages with variable rates are calculated as Euribor + X%, where X is normally anything between 0.75% and 2%.

Most vaiable mortgages are recalculated annually, based on the Euribor 12 month value on that day. If you would like to know the current 12 month value please contact us.

For an extensive choice of new and off plan property for sale in Spain on the Costa Blanca and Costa Calida, visit the Novocasa website.