When the time comes to consider buying a house and requesting a mortgage to be able to pay for the property, we must always keep in mind the savings and income that we have. To calculate the mortgage that can be granted to us, the income will be a determining factor, as will the savings, since we will have to have approximately 30% of the value of the property for the loan to be granted.
Calculate mortgage: according to income
We can calculate the mortgage with the highest installment that can be granted based on the maximum installment that we can pay, which according to the Bank of Spain should not exceed 35% of monthly income. In this table, we show what PHH mortgages we can aspire to based on our income.
Monthly net income Fee (not higher than 35% income) home value 80% mortgage Derived expenses 10% Derived expenses 10% + 20% house value
1.000€ 340,96€ 125.000€ 100.000€ 12.500€ 37.500€
1.500€ 511,44€ 188.000€ 150.000€ 18.800€ 56.400€
2.000€ 681,92€ 250.000€ 200.000€ 25.000€ 75.000€
2.500€ 852,40€ 310.000€ 250.000€ 31.000€ 93.000€
3.000€ 1.022,88€ 375.000€ 300.000€ 37.500€ 112.500€
Are you looking for a mortgage with which to pay cheap installments? In HelpMyCash ‘s ranking of the best mortgages, you will find those with the lowest interest rates.
Interpretation of the table
- Example 1: A couple with a net income of 3,000 euros per month can buy a home for up to 375,000 euros, with which they would pay a monthly installment of 1,022.88 euros.
The bank will grant them 80% of the value of the house, that is, 300,000 euros. But for the loan to be granted, they must have saved 121,500 euros.
These 121,500 euros is the sum of the deed expenses (10%), 37,500 euros, plus 20% of the value of the house that the bank does not finance, that is, 75,000 euros.
- Example 2: On the contrary, a couple whose monthly income adds up to a total of 1,500 euros, can afford to buy a house of up to 188,000 euros, with which they will pay a monthly installment of 511.44 euros.
The bank will grant them 80% of the value of the property, that is, 150,000 euros. And they must have saved 56,400 euros. On the one hand, 18,800 euros of derived expenses plus 37,600 euros corresponds to 20% of the value of the home.
And if the Euribor rises to 3%?
The relationship between PHH mortgages and Euribor influences the share of variable mortgages because the index fluctuates. Therefore, every time we have to review the loan every 6 or 12 months, the bank will recalculate our monthly installment based on the last value reached by Euribor.
This index is currently listed below zero, but the mortgaged should not be trusted, since in a 30-year mortgage the installment will be affected, up to several hundred euros, by the values that the Euribor marks.
For this reason, we should not calculate the mortgage only according to the value that marks the current Euribor, but it is more intelligent to be proactive and think about what would happen if the index rises to 3%, for example. Could we then pay the mortgage?
Interpretation of the table
Example 1: A couple with a monthly income of 3,000 euros, a house worth 375,000 euros, and a mortgage with a monthly installment of 1,022.88 euros per month.
In this case, if the Euribor were to rise to 3%, the mortgage payment would rise to 1,844.77 euros, more than 50% of the value of the couple’s monthly income. Therefore, at this point, they will have economic difficulties paying the installments. Perhaps it would have been more interesting to have bought a house for 300,000 euros.
Compare mortgages and choose the best
The calculations that we have elaborated on give approximate data, but they can vary depending on the mortgage and the bank in which we contract it. At HelpMyCash we recommend that you compare several offers, at least 3, and choose the one that best suits your economic profile.
Find the best mortgages of the moment and use our free comparator, so you don’t have to leave home to find your mortgage.
Are you interested in the BBVA Variable Mortgage? Calculate how much it will cost you
If we want to tie ourselves to the Euribor to finance the purchase of our future home, it is likely that we have looked at the BBVA Variable Mortgage. It is a loan with an attractive interest, so your installments will be, a priori, affordable. Now, how much would they cost us if we did not contract the necessary products to lower the interest? Or if the Euribor rose? To find out, in this article we will explain how to calculate the price of this credit.
How much will this mortgage cost me if I meet the bonus requirements?
This mortgage loan has an interest of 1.99% in the first year and Euribor plus 0.99% from the second, the latter subsidized by 0.50 points for direct depositing the payroll and taking out home insurance with BBVA and at 0 .50 more points for taking out life insurance with the bank.
With these data, let’s see what installments we would pay for an average mortgage of 150,000 euros with a term of 25 years. For the calculation, we will start from the hypothesis that the current Euribor (-0.498%) would be maintained throughout the life of the credit.
- Fee for the first year: €635.05/month
- Fee for the rest of the term: €535.07/month
We would also have to pay the price of the home and life insurance (the so-called premiums). Its cost may depend on the conditions of the home and our personal and work situation, so if we want to know it, we will have to ask the bank directly.
And how much will BBVA Variable Mortgage cost without the subsidized interest?
It is possible, however, that we do not want to contract some of the services that BBVA offers to discount interest. In that case, the rate applied to the Variable Mortgage will be higher, so the installments to be paid will be more expensive.
If I do not contract any product
First of all, let’s see what monthly installments we would have to pay (based on the previous example) if we didn’t want to direct deposit our salary or take out home and life insurance from the bank, in which case the interest would be 1.99% the first year and Euribor plus 1.99% the following:
- Fee for the first year: €635.05/month
- Fee for the rest of the term: €600.62/month
You would also have to pay the mandatory damage insurance premium that must be contracted if you do not subscribe to the bank’s home insurance (it can be contracted with any insurance company).
If I only contract life insurance
On the other hand, if we only took out life insurance, the interest would be 1.99% the first year and Euribor plus 1.49% the following. These are the fees that would have to be paid in this case:
- Fee for the first year: €635.05/month
- Fee for the rest of the term: €567.24/month
Additionally, we would have to pay the BBVA life insurance premium and the compulsory damage insurance that we contracted on our own.
If I domicile the payroll and sign the home insurance
And what if we just didn’t take out life insurance? In this case, by direct debiting the payroll and contracting the home insurance, the BBVA Variable Mortgage would have an interest rate of 1.99% the first year and Euribor plus 1.49% the following years. And this would be the odds for the example that we have used throughout this article:
- Fee for the first year: €635.05/month
- Fee for the rest of the term: €567.24/month
In addition, we should pay the cost of the home insurance contracted through the entity.
How much would BBVA charge me if the Euribor rose?
We have calculated the fees shown on the basis that the Euribor will not change during the entire term of the mortgage. Now, there is a high probability that it will go up, either for the next year or for the subsequent ones. For this reason, it is important to simulate how much those monthly payments would cost us if this index were to rise.
In the following table we show how much we would pay with various values of the Euribor if we asked for 150,000 euros over 25 years and applied the discounted interest :
When we make these calculations, we must ensure that the monthly fee does not exceed 35% of our net income. If this limit is not exceeded, we will be safe from suffering an over-indebtedness.
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