Spanish Capital Repayment Mortgage Spain

A Spanish capital repayment mortgage is repaid to the mortgage lender in monthly installments. The term of these monthly payment sis usually 25 years, although in some countries, like Spain, the standard is 25 years. The monthly payments on a capital repayment mortgage are made up of 2 parts, the first part is a repayment of the interest due to the lender from the capital loan, and the second part is a contribution towards the capital owed on the loan overall.

You will find with a mortgage that in the beginning, most of what you are paying back to the mortgage lender is interest. This can be disheartening as it brings to reality the amount of interest you will pay over the lifetime of the mortgage. However, as the mortgage term progresses, the ratio of interest to capital repayments begins to swing in favour of paying off more capital than interest. As you pay more off the capital of your mortgage, the interest (which is charged as a percentage) is constantly reducing.

Look at the table below. This table demonstrates the monthly mortgage repayments in the first year for a home loan of €275,000. As you can see, as the months progress, the amount of interest paid already begins to reduce, while the amount of principal paid off increases. Although the changed amounts are small, it must be remembered that lifetime of the mortgage is 25 years.