Mortgage to buy an apartment in Madrid: how much savings do I need
Before applying for a mortgage, it is essential to calculate how much of your own savings you need. We explain the factors that determine that figure when buying an apartment in Madrid.
One of the first questions anyone looking to buy a home in Madrid asks is how much savings they need before applying for a mortgage. Although the exact answer depends on each financial institution and on each buyer's personal circumstances, there are several general factors worth understanding before starting your process of buying an apartment in Madrid.
What part of the price the mortgage usually finances
As a general market rule, financial institutions usually finance a percentage of the valuation price or the purchase price of the property, taking the lower of the two values, while reserving the rest to be contributed by the buyer from their own funds. This means that, in addition to the amount not financed, the buyer must have enough savings to cover that part of the price.
Buying costs are added to the savings required
To the savings needed for the unfunded portion, you must add the costs associated with buying a home, such as notary fees, land registry fees, management fees and, especially, the taxes levied on the transaction, which represent a very significant part of the total outlay. These costs are generally not usually financed by the bank, so they must also be covered with your own savings.
The importance of the valuation
The bank does not base its financing solely on the agreed price with the seller, but on the property's valuation, obtained through an approved valuation company. If the valuation is lower than the purchase price, the financing will be calculated on that lower figure, which may increase the savings you need to contribute.
Your borrowing capacity
In addition to the savings available, financial institutions assess the relationship between your income and the amount of the monthly mortgage payment, as well as the stability of your employment situation. This assessment determines the maximum loan amount the institution is willing to grant you, regardless of the savings you have available.
A buffer for unforeseen expenses
In addition to the savings set aside for the purchase, it is advisable to keep an additional buffer for unforeseen expenses, avoiding committing all of your savings to the transaction. This reserve gives you some security against unexpected costs once you are already the owner of the home.
How to calculate your specific situation
Since each financial institution may apply different criteria, and since mortgage market regulations and conditions change over time, the most advisable thing is to request a tailored simulation from different institutions before committing to any property through a deposit agreement. This will allow you to know precisely how much you can finance and how much savings you need to contribute in your specific case.
Professional support in the search for financing
Having the support of a property professional during this process allows you to better understand how your savings and borrowing capacity fit with the homes you can truly afford, avoiding visits to properties beyond your actual budget. At UBICASA we support our buyers at this stage, helping them understand their financial situation before beginning the search. Explore our available properties in Madrid or contact us for personalised advice on your purchasing capacity.
Differences between fixed and variable rates
Another factor that influences planning your purchase is the mortgage interest rate, whether fixed, variable or mixed. Each option involves different monthly payment behaviour over time, so it is worth comparing several offers and understanding the conditions of each one well before deciding, always with the advice of the institution itself or of a professional specialised in finance.