Which mortgage sounds better?

[puretone]

Hi guys,

*First of all my apologies - I put 'Key Post' as prefix without knowing what's going to happen and now I can't get it off. This post is not about buying a house in Ireland but in Spain..*

We're buying a property in Spain and I am still undecided which one I should go for. I really have to make a decision sooner than later since we're already one month behind the expected signing date....

For me I would say the interest rate would be more important but paying 5% more than I planned does affect me too.

Which one will be a financially sound choice??

I respect there are many financial experts in this forum so any advice will be immensely appreciated. Thanks!




Mortgage 1

Loan: 208,300EUR (70% purchase price)
Int Rate: 5.5% for the first year and (annual) Euribor+0.75% for the rest of years
35 years repayment mortgage
Early repayment charge: 1-5 yrs 0.5% / 5 yrs onwards 0.25%
Opening fees: 0.75%
Life insurance (365EUR) & Building insurance (309EUR) required from the bank.
(LI premium will decrease in accordance with the reduction in the capital of the mortgage)

Mortgage 2

Loan:191,750EUR (65% purchase price)
Int Rate: Quarterly Euribor+1%
35 years interest only mortgage (or repayment we've got a choice)
Early repayment charge: none, admin fees 200EUR at any time
Opening Fees: 1%
Life insurance not required
Building insurance required

 

[LDFerguson]

If you have the extra 5% deposit and you intend keeping the property for a minimum of five years, I'd go with the first option as it's cheaper. Yes they require life assurance but it's generally prudent to have life assurance covering all your debts anyway.

 

[puretone]

Thanks LDFerguson.

One thing - the extra 5% deposit required is option 2 since I borrow less?

 

[LDFerguson]

Sorry - didn't have enough caffeine in me when posting this morning.

I'd still say Option 1 but if you have the extra 5% reduce the loan on Option 1.