How the process works

The required documentation may vary between banks, but generally, the essential documents for applying for a mortgage loan include:

• Identity Card or Citizen Card and Tax Identification Number;

• Most recent income tax return and settlement notice;

• Copies of the last three pay slips;

• Employer’s statement;

• Property location plan;

• Building or unit plan;

• Proof of other income.

Additional documents may be requested depending on the bank and the client’s specific situation – for example, if the client is a pensioner, employed, or a non-resident.

It is not mandatory to have an account with the bank where you intend to take out a mortgage. However, most banks require the client to open an account as a condition for granting the loan.

What insurance is required for a mortgage loan?
Banks usually require two main types of insurance for granting a mortgage loan:

1. Life insurance – ensures the loan is paid in case of the borrower’s death or disability, protecting both the client and the financial institution.

2. Home multi-risk insurance – covers property damage, such as fire, floods, or other incidents, safeguarding the mortgaged property.

In addition to these, the bank may recommend other complementary insurance policies, but the two above are essential for loan approval.

The Euribor (Euro Interbank Offered Rate) is the reference rate used by European banks to lend money to each other. In mortgage loans, the Euribor serves as the basis for calculating the interest rate applied to the loan. For example, if your loan has a rate of “Euribor + spread,” the final rate will be the sum of the Euribor and the bank’s margin (spread).

The spread is the profit margin that the bank applies on top of the reference rate (such as Euribor) to calculate the interest rate of a mortgage loan. In simple terms, it is the additional amount charged by the bank for the risk and service of granting the loan. The lower the spread, the lower the interest rate applied to your mortgage.

The APR (Annual Percentage Rate) represents the total cost of the loan, including interest, fees, and other charges associated with the borrowing. Unlike the nominal rate (TAN), which only reflects interest on the principal, the APR allows for a transparent comparison of different loan offers, showing the actual amount you will pay the bank over time.

The TAN (Nominal Annual Rate) represents the interest rate applied to the principal of a mortgage loan, excluding other fees or additional costs. It indicates only the interest charged by the bank on the borrowed amount and does not reflect the total cost of the loan.

The MTIC (Total Amount Payable by the Consumer) represents the total amount the client will pay to the bank over the term of the loan, including principal, interest, fees, and other charges. It reflects the overall cost of the credit, allowing the borrower to know exactly how much they will pay until the loan is fully repaid.