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In Spain there are many autonomous regions, each with their own regional governments, so it will be impossible to detail each and every situation ranging from Valencia to Bilbao, Barcelona to Seville, but this article will attempt to give a detailed overview of the general situation, rather than a gloss-over of the main points.

Perhaps the first point to mention is that in Spain there are two main financial entities that you can apply for a mortgage from. The banks in Spain work all on a similar basis, and are classes as Bancos International brands such as BBVA and Banco Santander will be familiar with most readers. The second type of entity are the cajas or cajas de ahorros which are usually autonomous societies, formed as savings banks or building societies often born in fruitful autonomous regions and occasionally expanding nationwide. Perfect examples would be Caja Madrid, Catalunyas La Caixa, and Caixa Catalunya. These entities are sometimes easier to gain a mortgage from, although conditions can often be easier manipulated to the favour of the caja, rather than those rules rigorously set down by the Banco de España.

Now within the Cajas or Bancos, there are various products on offer when it comes to taking a loan out on a property. For the sake of example, lets take a first time buyer on a starter home. Perhaps one of the main differences in any type of loan from a financial entity is the type of interest paid. Its extremely common in Spain for an interest rate to be applied to your loan sum on an annual basis, with a revision each calendar year, around the same date as you sign your mortgage. This means that although interest rates may fluctuate, as they tend to do, then if you happen to sign your mortgage in the highest peak of interest, then you will pay that amount of interest for the entire year even if interest rates go down. This has the advantage of always knowing your monthly budget of spending, but the converse is true in that if you coincide with a peak which then drops dramatically, youre stuck with the same rate for the rest of the year. Mortgage trackers working on a month to moth basis, known across the world, are unknown in Spain.

Just to make things more complicated, there are then two different types of indexes your bank or building society can chose to employ regarding your policy. The Euribor is the European Interest rate, although its worth noting that within the Eurobor, there is a separate (always highter) Euribor Mortgage rate.

The second Interest rate that may be applied is the more stable IRPH, which takes an average of the previous 4 months Euribor and then calculates the rate this way. Any loan from a bank or building society will charge the client (thats you) one of these two rates, plus anywhere between 1-3%, depending on the risk, size of the property, available guarantors, etc. (remember, my example here is for first time buyers).

Any loan from either entity usually has a 1% opening fee on the net price, and the same for any cancellation before the time of the loan expires loans are typically given for 30 years, although in recent years, certain banks have given loans of up to 50 years, or those which will be inherited by next of kin/offspring. This means that swapping and changing mortgages over banks is almost impossible in Spain, given the costs involved. A 1% cancellation fee in one bank followed by a 1% opening fee in the second (even if this is waived) means that there needs to be a considerable saving on the general conditions offered by another entity for it to be worthwhile considering. It almost becomes a stock market game, playing the possibilities of the possible rise in inflation something that few people saw coming in the latter part of 2008, for example.