THE INTEREST ONLY MORTGAGE


Offered in association with our colleagues at Halifax

Right Click Here to download an Excel Interest Only Guide Calculator!

The maximum age that a mortgage can finish at is 80. Therefore what we can offer clients depends greatly on what age they are and their income and is subject to a maximum of 30 years in total and 70% of the valuation.

There are two components involved with the Interest Only Mortgage.

The first part is the Interest Only Period

An important point to remember is that only clients who are RESIDENTS in Spain can get up to 15 Years Interest Only. If they are NON RESIDENTS they can get a maximum of 5 Years.

During this period a client is only paying the bank the Interest owing on the money they have borrowed. None of the client's monthly payment goes towards paying off the capital. This means that if a client borrowed 100,000€ with a 10 year Interest Only Period, after the first ten years he would still owe 100,000€.

The second part is the Capital Repayment Period

This is the part when a client starts to pay off the Capital & Interest, spread over the remaining period of the Mortgage.

The minimum period for this is 5 Years but realistically needs to be at least 10 Years, so this needs to fit in with the age of the client. The longer the Repayment period the smaller the monthly payment.

Please bear in mind that the monthly repayment figures need to be realistic and your income provable. The bank won't loan 200,000€ to someone with no or little income.

This product is suitable for anyone who is unlikely to keep a property for longer than the Interest Only period. This is because even with a normal mortgage very little of the capital is paid off during the initial years.

A final important note is that there is no penalty for canceling this type of mortgage. Most if not all mortgages done through Spanish Banks charge at least 1% cancellation fee.

Example 1

A couple aged 40 Years want a Mortgage of 150,000€ to buy a property valued at 215,000€. They have the correct deposit and can prove a healthy income. They want the interest only period for 10 years and repayment period to be 20 years (Total Mortgage 30 Years).

Cost per month for first 10 years
434€
Cost per month for remaining 20 years
868€

Example 2

A 65 year old man wants to take out a small mortgage of 50,000€ on his hose valued at 450,000€.

Here we have a maximum of 15 years to play with (max age 80).

We could offer him an interest only period of 5 years and a repayment period of 10 years, providing he can prove enough income.

Cost per month for first 5 years
145€
Cost per month for remaining 10 years
494€

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