The lack of savings is the main problem faced by many of those interested in buying a home in Spain. In the vast majority of cases, if a mortgage is requested from the bank to finance the operation, the amount will cover a maximum of 80% of the price. Therefore, the future owner must pay the remaining 20% ??out of pocket, in addition to the expenses associated with formalizing the sale.
Is it possible to get a mortgage to finance 100% of the purchase and not have to contribute so much savings? According to the financial comparator HelpMyCash.com, although it is not common, there are some banks that offer this type of product. Now, before applying for a mortgage loan of this type, it is important to know its particularities and, above all, its risks.
First of all, it must be taken into account that few banks offer to finance up to 100% of the purchase of a home, as they consider that there is a greater risk of non-payment associated with these operations. According to the latest data from the Bank of Spain, only 6.6% of mortgage loans granted during the third quarter of 2023 covered a percentage greater than 80% of the value of the property.
Consequently, finding an entity willing to grant a mortgage of up to 100% of the value of the home can be difficult. In fact, banks that do approve this type of operations do not usually make it public: in many cases, they offer this possibility after a negotiation process, and only if the client enjoys a good economic, employment and financial situation.
For this reason, HelpMyCash considers that it may be advisable to hire the services of a mortgage broker. Due to their greater knowledge of the financial market, these professionals know which banks are best to go to to obtain a 100% mortgage. And not only that: they also negotiate with the entities to increase the probabilities of concessions and to try to obtain more competitive conditions.
Secondly, the applicant must be very aware that taking out a 100% mortgage exposes them to a greater risk of non-payment. The reason is simple: by financing the entire price of the home, the loan installments will be more expensive than if the bank covered 80% of the operation, since the amount lent will be greater. Consequently, the client will need a larger portion of his income to meet the monthly payments.
With a practical example it is easier to see. Let’s say a person wants to buy a home that costs 200,000 euros. If you request a mortgage to cover 80% of that price and it has an average interest of 3% and a term of 30 years, the monthly installments to pay will be about 675 euros. On the other hand, if the mortgage loan finances 100% of the purchase and has the same interest and term, the monthly payments will be about 843 euros; which will mean paying about 168 euros more each month.
It is important, therefore, for the client to ensure that they can pay those higher monthly payments without problems. The ideal, according to the comparator’s analysts, is that the amount of the monthly mortgage payments, together with those of other credits that the future owner has in force, does not exceed 30% of his net monthly income.
Finally, HelpMyCash warns that taking out a mortgage that covers 100% of the purchase does not allow you to access a home without having savings. The future owner will have to pay out of pocket the expenses associated with formalizing the sale (notary, registration, administration and taxes), since banks practically never offer to finance them.
The price of the purchase and sale expenses is usually equivalent to between 10% and 12% of the price of the home. For example, if you want to buy a house for 200,000 euros, you will have to have saved between 20,000 and 24,000 euros to complete the operation. Likewise, if the client hires a mortgage broker to obtain a mortgage of up to 100%, they must also pay this professional’s fees, which cost about 3,000 euros on average.
