How mortgage payments are calculated

1 February, 2023 | Alba Tebar

Finding the right house, the right bank, and investing the right amount of money on it, is a process that is usually so much more difficult than it may seem. In Hipotecasplus we are aware of the difficulties the customers may face regarding the management of all mortgage payments; that is why we want to help you with that post. Here, we will explain you how the mortgage payments are calculated, so you don’t have to worry about being scammed or anything like that!

Anyways, it is always recommendable to have the help of an expert in the world of the real state. In that sense, you could take advantage of our worker’s experience in that sector and ask us for advice.  We will assess you with everything you need, and make sure that your mortgage payments are calculated properly and that you are paying the right amount of money for your property. So, do not hesitate to contact us if you want to discuss anything related to that topic. We would be more than grateful to help you with that!

Which matters in terms of mortgage?

First, you should be aware of the three main elements that will determine which mortgage you can afford: your income, your savings and the repayment term.

  • Regarding income, the Banco de España suggests that the mortgage loan should be lower than 30% of your monthly salary. The idea here is to avoid debt.
  • When talking about saving, which is highly recommended to have more than 30% of your property value saved. That is because bank entities usury finance up to 80% of the price of the house, so you will need to put some money from the very first moment. However, remember that Hipotecasplus can negotiate with your bank and might be able to enlarge this financial percentage up to 80%, depending on the person’s personal situation.
  • If we focus on the repayment term, it is obvious that it will not be the same to pay your mortgage in 15 years than in 30.

How to calculate mortgage

Mortgages are calculated with a formula that will show you how much you should pay for your house. The formula is the following one:

We can guess that this random formula may frighten you a little bit. However, you should not be worried about it, because you can always rely on the help of our experts from Hipotecasplus to calculate it. In addition, we provide you with an online and free calculator of mortgage. You can find it in our website, and it will tell you in less than a minute the amount of money you’ll need to pay in your mortgage.

So to say, based on certain information such as the price of your property, the interest rate or your repayment terms, this calculator will tell you how viable your mortgage is going to be. Furthermore, remember that you can contact usand ask us any related question about that topic!

Calculating housing expenses

When buying a house, you will be facing two different types of expenses. On the one hand, we find those ones related to the trade, for which the buyer is responsible. And, on the other hand, we find those expenses related to the mortgage itself. They are mostly paid by the bank, except those ones regarding appraisal and commissions.

Trading expenses

  • Notary. That Will include the fees you must pay the notary for management. It is normally around 850€, but it might depend on the notary you go to.
  • Property registration. This registration is compulsory at is requires around 375€ to formalize it.
  • Management agency. Probably, this will cost you around 400 euros.

In addition, there are other expenses related to taxes. We are talking about the Tax of Patrimonial Transfers (if it’s a second property), or VAT and Documental Legal Acts (if you are buying a brand new house).

Mortgage expenses

  • Appraisal. The role of the appraiser is used to value the property that you are going to buy, sot the bank can know the exact price it has and thus give you a financial percentage of mortgage.
  • Commission of opening. It includes de expenses of study, processing and license for the new house. This commission can vary between 0% and 3% of the total amount of the financing.
  • Bank check commission. This commission takes place when the client requests the insurance of a bank check in the name of a third person.
  • Modification of conditions or change of guarantees commission. This one is necessary just if you change some conditions within the contract you signed the first time. They will depend on the bank entity you are working with.
  • Commission of early payment. It will depend on each bank. However, in general terms, that it the commission you will have to pay in case you wan to finish paying your mortgage before the pre-set time limit. According to the Law 5/2019, there are two possibilities:
    • Fixed rate: the commission for partial amortitzation is 2% for the first ten years and 1’5% for the following ones.
    • Variable rate: the commission is 0’15% during the first five years, and from then on, there is no commission at all.

Thus, now that we are here, let’s summarize the main costs that are going to take place regarding your mortgage payments:

  • Sales expenses
  • Mortgage expenses
  • Appraisal and commissions
  • House price itself

Taken as a whole, we have seen that calculating a mortgage is not an easy thing to do, and that is not the same for everybody. Although the formula is the same, you will need to add or quit different taxes and change some details depending on your type of contract. So, remember that you can always use the knowledge and experience of our team from Hipotecasplus to solve any question you have related to this. We will be more than happy to be part of the solution!