Mortgage Calculator

When should you use this calculator?

A mortgage is the most common long-term loan for buying property in Spain. Most lenders finance up to 80% of the appraisal value, so buyers must provide at least a 20% down payment, plus around 10-12% extra for purchase costs and taxes.

How it is calculated

The monthly payment is calculated using the French amortization system, the most common in Spain: payment = C · [ i (1+i)^n ] / [ (1+i)^n ∑’ 1 ], where C is the outstanding principal, i is the monthly interest rate (the nominal annual rate divided by 12) and n is the total number of payments. This formula splits every payment into two parts that change month by month: interest, calculated on the principal still outstanding at that point, and principal repayment, which is the rest of the payment. Since the payment stays constant while the outstanding principal falls each month, the interest portion shrinks progressively and the principal portion grows, even though the total payment does not change.

On a variable-rate mortgage, the monthly interest rate is not fixed for the whole life of the loan: it is recalculated at every review (usually every 6 or 12 months) by adding the agreed spread to the current Euribor value, and the payment is recalculated using the actual outstanding principal and the remaining months. This means the same French-system formula is applied again at each review, not just once at the start of the loan.

Practical example

A numeric example makes this clearer: a €200,000 mortgage over 30 years at a fixed nominal rate of 3% gives a monthly payment of €843.21. Over the 360 months, the total paid is €303,554.90, of which €103,554.90 is interest and €200,000 is the repayment of principal. In the early years, most of each payment is interest; from around the midpoint of the loan onward, the proportion flips. Shortening the term changes the outcome significantly: the same mortgage over 20 years raises the payment to €1,109.20 a month but cuts total interest to €66,206.85 - a saving of more than €37,000 just from choosing a shorter term.

Nominal rate (TIN) vs. APR (TAE): why they differ

The nominal interest rate (TIN) is the percentage used to calculate the payment, but it does not reflect the real cost of the loan. The APR (TAE in Spanish) does, because it also incorporates fees (arrangement, appraisal) and other costs of the operation, expressing them as if they were part of the interest rate. By law, all lenders must display the APR alongside the TIN in advertising and in the pre-contractual information sheet (FEIN), precisely so two mortgages with the same TIN but different fees can be compared fairly. A mortgage with a lower TIN but high fees can end up with a higher APR than another with a slightly higher TIN but no fees.

Fixed vs. variable rate

Spain mainly offers two mortgage types: fixed-rate mortgages, where the payment stays the same throughout the loan, and variable-rate mortgages, usually linked to the Euribor plus a spread set by the bank. Mixed mortgages combine both systems: an initial fixed-rate period (typically 3 to 10 years) followed by a variable-rate period. Fixed mortgages offer full predictability in the payment, especially valuable on a tight household budget; variable ones can work out cheaper in years of low Euribor, but shift the risk of rate rises onto the borrower, with the resulting impact on the payment after every review.

Common mistakes

A common mistake is comparing mortgages by looking only at the TIN or the monthly payment, without checking the APR or the total term, which hides the real effect of fees. Another frequent mistake is choosing the longest possible term to minimize the payment without calculating how much more is paid in total interest, as the example above shows. It is also common to overlook tied products (home or life insurance, credit cards, pension plans) that some banks require in exchange for a discount on the interest rate: if those products are not really needed, they can end up costing more than the discount they provide on the payment.

Early repayment

Repaying principal early reduces the remaining total interest, whether by shortening the term (keeping the payment the same) or reducing the payment (keeping the term the same); the first option saves more interest in absolute terms, because it lowers sooner the principal on which interest keeps being calculated. Since Law 5/2019, the early repayment fee is capped: on variable-rate mortgages, a maximum of 0.25% during the first 3 years (0% afterward); on fixed-rate mortgages, up to 2% during the first 10 years and 1.5% for the rest of the term, as agreed in the contract. For example, repaying €10,000 early on a fixed-rate mortgage in its first year could mean a fee of up to €200 (2%) - it is worth comparing that cost against the interest actually saved before deciding.

Refinancing: switching or renegotiating your mortgage

If the mortgage conditions stop working for you, there are two ways to change them without cancelling the loan: novation, which renegotiates the terms with the same bank (switching from variable to fixed, extending the term, removing tied products), and subrogation, which moves the mortgage to another lender offering better conditions. Both operations carry notary and administrative fees, normally lower than those of a brand-new mortgage, so it is worth calculating whether the saving in payment or APR outweighs those costs before starting the process.

Legal and tax context

The LTV (Loan to Value) ratio measures what percentage of the property value the requested loan represents. An LTV below 80% usually secures better conditions, since the risk for the lender is lower; going above that threshold usually requires guarantors or stricter conditions. Before signing, it is also worth budgeting for the costs associated with the purchase - appraisal (€300-600), administrative fees, property registry, notary and the property transfer tax or VAT depending on the type of property - which typically add another 10-12% on top of the purchase price, not just the 20% down payment.

Other calculators you may find useful

If you found this calculator useful, you might also want to check out:

• Rent vs buy
• Mortgage Comparator
• Personal loan

Frequently asked questions