Is 3.4% reasonable for a mortgage these days ?

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22 Jul 2009 00:00 by el romeral Star rating. 21 posts Send private message

Our latest mortgage rate has been calculated at 3.4% with Banco Pastor. Anyone know if this about the going rate ?





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22 Jul 2009 14:52 by philevans Star rating in Axminster Devon & Sa.... 187 posts Send private message

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bancaja rate is 2.61



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22 Jul 2009 20:41 by Smiley Star rating in San Pedro de Alcanta.... 2478 posts Send private message

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Depends on the loan size and status of the client.



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22 Jul 2009 23:17 by TechNoApe Star rating in Duquesa, Manilva. 1278 posts Send private message

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In layman's terms, your rate will depend on two factors:

It is always a set percentage above the Euribor average rate that your bank uses.

The percentage depends on what has been stated in your mortgage agreement and also this will state what monthly average Euribor rate they will use, some banks use last months, others will go back two months.

My bank charge 1% above the average Euribor rate of two months ago, which works out as: 1.644 + 1% = 2.644

So in answer to your question, No! I don't think it is a good rate, as it sounds like they are charging you over 1.80% above either of the last two monthly Euribor averages.

As the average for last month was 1.610 and it is set to be lower again this month.

Phone them up and ask them what percentage they charge above the average Euribor rate and then ask them what monthly average rate they are using... and then compare it with this chart of monthly average euribor rates since Nov. 08.

 



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23 Jul 2009 00:26 by Smiley Star rating in San Pedro de Alcanta.... 2478 posts Send private message

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In non laymans terms it is not always a set rate above Euribor that a bank uses. Some lenders use IRPH ( I wont begin to try and explain but call it a National equivalent to UK SVR). Some lenders also have rates on which they apply "special" calculations which have mysterious terms such as "Directors rate" - these "special" terms appear to have quite complex formulae for calculating interest and when I have asked the lenders themselves for copies of the formula or at least to explain how they calculate interest there is a puzzled look that comes over their face almost as if to ask why would I want to know.

Some banks also have a collar that they apply to their mortgage rate. To wit when rates decrease there is a minimum charge and the pay rate will not go below that. Depending on when you completed on your purchase, with Pastor it is likely you are being charged IRPH - I have an idea that Pastor also apply a collar but you would have to ask them - have very very rarely used them and it was long ago as there appeared to be a lack of transparency about what they do and dont do. There is no regulation on mortgages here so no necessity on lenders to be transparent or tell you about the small print - we werent happy so felt unable to use their products for our clients.

I should also perhaps mention that since the arrival of a certain thing called credit squeeze and general lowering of Eurozone interest rates all lenders have now increased the margin above Euribor that they charge. A minority of lenders have left it the same but have restricted loan to value or have imposed stricter income criteria, reduced flexibility, interest only etc.



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23 Jul 2009 14:44 by philevans Star rating in Axminster Devon & Sa.... 187 posts Send private message

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hi

While were on the subject of mortgages, does anyone know if spanish banks charge you for early settlement, or is it down to the individual bank?



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23 Jul 2009 15:10 by joanmalaga Star rating in Costa del Sol. 422 posts Send private message

Depends on each bank, it should say on the mortgage deeds, normally its 1% with most banks





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23 Jul 2009 15:43 by Marksfish Star rating in Sandy, Bedfordshire/.... 2413 posts Send private message

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Checked mine which has recently gone down to 2.84% on a 6 monthly Euribor +1.25%

Mark



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23 Jul 2009 19:31 by el romeral Star rating. 21 posts Send private message

Thanks for the replies. It would then appear that we are on the high side. Not impressed with this bank at all.





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23 Jul 2009 19:59 by Smiley Star rating in San Pedro de Alcanta.... 2478 posts Send private message

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Regarding penalties Phil there are very very few lenders where there is not some sort of early repayment penalty. Depending on when your mortgage was arranged (assuming you have one) this may be as high as 1% with no consideration for any type of early repayment. In 2006 a new law was introduced but it did not become effective until 2007 stipulating a maximum early repayment penalty of 0.5% during years 1 to 5 reducing to 0.25% thereafter. Some although not all lenders permit a consideration for overpayment whereby you can deposit lump sums to pay the mortgage off early without incurring penalty.



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