What percentage of income should a mortgage be?

20 September, 2023 | Alba Tebar

The percentage of income that should be allocated to a mortgage payment can vary depending on individual financial circumstances and local housing market conditions. As we like to say, every person is a world, because each one has a particular situation when it comes to income and finances.

However, as Bank of Spain recommends, it is important to allocate a maximum of 30% of your salary to pay the mortgage. So, for example, if you earn 2000€ per month, your mortgage should not be higher than 600€.

By this way, you’ll make sure you can comfortably pay your mortgage as well as the rest of your payment obligations, such as parking rent, children’s school, gym, or electricity and gas bills, among other obligations and debts you might have. In a world, the most important thing is to make sure you don’t get into debt because of your income. And the best thing to avoid that is to always stick to the 30% limitation.

How to manage income to pay the mortgage

First of all, it is necessary to have a higher salary than your mortgage. If not, you’ll quickly get into debt. Furthermore, there are some other aspects you should pay attention to. Let’s explore them.

  • Associated expenses. To pay the notary, registration, appraisal, and taxes, it is likely that you will need to allocate an additional 10%, depending on the autonomous community where you buy. Therefore, it is an important percentage to take into account.

  • Work situation. Your current employment situation should be considered, as well as the future one. For example, it is not the same if you have a temporary or indefinite contract, so it’s important to think about the future, as a mortgage is a long-term thing.

  • Other debts and expenses. To determine the maximum mortgage according to your salary, you must also analyse the income and expenses that you have. For example, it may be that, in addition to your salary, you also receive a widow’s pension or the rent of another apartment. In that case, your net income would be higher and you would be able to allocate more money to the property’s purchase. The same happens in the opposite situation: if you have several more letters, people in your charge or high medical expenses, you’d need to allocate more money than usual to their payment. Therefore, you’d have less money to pay the mortgage.

  • Type of mortgage. Finally, another relevant aspect is the type of mortgage you choose: fixed or variable rate. In case you have a fixed rate, you’ll always pay the same amount of money. However, if you have a variable rate, it will change depending on the Euribor, which is established by the banks, and you cannot control it. In Spain, bank entities usually revise it once every 6 or 12 months, and, according to its increase or reduction, your mortgage bills will also change.

Other aspects to take into account

One good idea is to try to save some extra money each month directly from your salary. For example, a 5% or a 10% can be an appropriate number, so you have some extra savings in case you need them in the future to settle the bank debt once and for all.

Another thing you could do to avoid debt is to lower your mortgage percentage from 30% to 20 or 25%. Because, even though that would mean you’ll need more years to repay the totality of the mortgage, it can be a good way of avoiding debt in case you have a low salary and a lot of financial responsibilities.

Besides, it is in your hands to choose a property that fits your financial situation, both short and long-term.

Help from a mortgage broker

Anyways, remember that the best way to make sure you pay the right percentage for your mortgage is to count on the help of a mortgage broker like Hipotecasplus. We are a group of professionals who have been working in this field for lots of years and know how to connect our customers with bank entities, in order to get the best possible mortgage according to their personal preferences and interests.

As mortgage brokers, we will also recommend you the best property and the best mortgage you can get. Moreover, we’ll negotiate with banks the best conditions for you. No matter if you are a foreigner or a local, we will offer you our experience working with Spanish bank entities so you can obtain a fair mortgage that perfectly adjusts to your income and your personal situation.

So, if you are thinking of buying a house but do not know exactly how to do it, do not hesitate to contact our offices. We will be more than happy to help you, and no commitment is required. We’ll be waiting for you!