The Barcelona Real Estate market was out of control in 2007. Absolutely everything which was sold made a profit, and the average price per square metre was at 3800 Euros. Fast forward to December 2009, and you can quite easily slash 500 Euros from that price, which although might not seem like much, if you’re buying a one hundred square metre apartment in the city, you’ll already be saving 50,000 Euros. Taking into account the number of brand new properties which are lying unsold as well as those people looking to upgrade or simply those who haven’t been able to afford the constant rise of their mortgage repayments, and it really is a buyers market at the moment, and many people are getting some fantastic deals.

It’s important to note first of all that before you start looking to invest in Barcelona, like many areas in Spain and indeed Europe at the moment, then your financial situation should be absolutely water-tight. Many of the lenders and financial institutions in 2010 are offering a fraction of the services and completing a tiny amount of operations and loans in comparison to years gone by. While it’s true that banks are launching advertising campaigns to attract customers in with never-before seen offers and the lowest interest rates in the history of the Bank of Spain, the requirements to qualify for those rates are equally as un-reachable. Here are five things you need to know.

Firstly if you’re an investor, forget about it. The exceptional interest rates and terms only apply to the habitual living space – i.e. your own home, and banks and building societies are not interested in second homes, investment opportunities or summer chalets.

Another huge shift in the mix which may come to a surprise is the percentage that financial entities expect you to be able to cover in respect to the repayments that the new loan will offer. That sounds more complicated that it is. What it means if that a couple of years ago, lenders would see how much you and a partner earn (or you alone) and then only offer a mortgage if the month repayments did not exceed around 60-65% of that amount. So in plain English if you earn 1000 Euros a month, the mortgage repayments cannot be above 600-650 Euros. In 2010 this figure has dropped to a tiny 40%. Which means for the same property, with a repayment of 600 Euros, you need to be earning 50% more than a couple of years ago.

A third thing to be aware of is the risk seems to have increased. Thinking about it logically, if you’re going to a bank to re-arrange your mortgage it means you’re unhappy with the repayments and want to see if they can offer a better deal. This means that as long as you’re managing to keep up with the current re-payments, then the new deal on offer should be absolutely no problem.

Number four on your list of things to check is the type of interest you’ll be offered. Most financial entities opt for one of two indexes; Irph or Euribor. Without going into too much boring detail, the Euribor is the European interest rate and you will be charged a percentage on top which is the bank’s profit. The IRPH index is a combination of the previous few months Euribor to create an average, supposedly more stable, although this is not the case.

Finally, remember that there is no such thing as a tracker mortgage in Spain, so your rate will be fixed for one year, and each payment will be the same. In one way this is good, as you know the same amount you’ll need to raise at the end of each month for your home loan, but don’t expect the repayments to fall if there’s a drop in the indexes, similar to what happened over 2008 to 2009 in Spain and Europe as a whole.

David Brydon has been living in Barcelona, Spain for 10 years and writes for Barcelona Real Estate Agents Modus Vivendi. Their Barcelona Real Estate Guidelines are a must-read for anyone serious about investing in the property market.

Article Source:http://www.articlesbase.com/mortgage-articles/remortgaging-in-spain-in-2010-five-things-to-consider-before-you-try-1722160.html

Following a period of 18 months of economic downturn, the housing market is beginning to recover with the number of outstanding mortgages rising by 1% during the 2nd quarter of 2009 compared to the same period of 2008. These figures show that the number of people borrowing money from banks and building societies is on the rise. Out of the many types of loans available from banks and building societies, one of the most popular loans is the fixed rate loan. This type of loan now represents 16% of all loans taken out for property purchases in the UK.

Unlike many other mortgages, the interest rate on fixed rate mortgages does not change during the term of the loan; they can also run over various lengths of time like any other loan.
The term of this type of bank loan is often limited to a shorter period than mortgages with variable interest rates. This is due to the fact the lender wants to limit the risks he is taking with the interest rates to a minimum.

Fixed rate mortgages are currently the type of loan that borrowers prefer to take out because the fixed rate makes it a secure mortgage. The loan is not subject to any variations in interest rate, even when there are variations in rates. This means the borrower pays back the same amount throughout the entire term of the loan. The borrower will therefore have to repay the same amount back each month.

Even though the initial repayment charges maybe higher than throughout the rest of loan, fixed rate mortgages are also more secure for the lender as the borrower is more likely to repay the loan as the fixed interest rates mean that the borrower will always pay the same amount each month.

The first repayment charges on longer term loans with fixed interest rates (between 5 and 10 years) is often more expensive than the following ones because the lender needs to cover the risk they are taking with the interest rates. That is why fixed rate mortgages are only available over a shorter period of time than mortgages that have a standard variable interest rate.

However, in most cases, the lender may want to impose an early repayment charge that will incur if the borrower changes mortgages or remortgages their house. In this case, the borrower may have to repay the entire loan before its term in order to be able to take out another mortgage or remortgage their house. Such charges are put in place to ensure the lender that the borrower who has taken out the fixed rate mortgage will be able to repay the loan until the mortgage’s end date.

With the number of mortgages on the rise following a period od economic downturn, it appears that loans with a fixed rate interest are becoming increasingly popular. For the borrower this means that despite the initial expensive repayment charges, they are guaranteed to repay the same amount every month, which means that the lender is also guaranteed to receive the same amount of money each month.

Article Source:http://www.articlesbase.com/mortgage-articles/fixed-rate-mortgages-during-economic-downturn-1442911.html