Complete Guide to Understanding Mortgages: Key Concepts and Terminology
- Jorge Cifre
- Dec 19, 2025
- 2 min read
Buying a property is often one of the most important financial decisions in a person’s life. For most buyers, this process involves taking out a mortgage. However, mortgage-related terminology can be complex and difficult to understand. This guide provides a clear and practical explanation of the key concepts you need to know in order to understand how mortgages work and make informed decisions.
What is a mortgage?
A mortgage is a long-term loan granted by a financial institution to purchase a property. The property itself acts as collateral, meaning that if the borrower fails to meet the agreed payments, the bank may execute the mortgage to recover the loaned amount.
Loan amount, term and monthly payment
Loan amount: The money borrowed from the bank, usually up to 80% of the lower value between purchase price and appraisal.
Term: The period agreed to repay the loan, commonly between 20 and 30 years.
Monthly payment: The regular payment including both principal and interest.
Interest rate types
Fixed-rate mortgage: The interest rate remains the same throughout the loan term.
Variable-rate mortgage: The interest rate is linked to an index such as Euribor plus a margin.
Mixed mortgage: Starts with a fixed rate period and later switches to a variable rate.
Euribor
The Euribor is the most common reference index for variable-rate mortgages in Spain and directly affects monthly payments.
TIN vs APR
TIN (Nominal Interest Rate): The basic interest rate of the loan.
APR (Annual Percentage Rate): Includes interest, fees and associated costs, making it easier to compare offers.
Fees, amortization and associated costs
Understanding commissions, early repayment options and additional expenses such as notary, registry and valuation fees is essential for proper financial planning.
Conclusion
A mortgage is a long-term financial commitment. Understanding its key concepts helps buyers make safer decisions and avoid unexpected costs.
If you are considering buying a property and want professional guidance, contact me for a no-obligation consultation to review your situation and ensure a smooth purchasing process.
📞 Jorge Cifre – Real Estate Advisor by eXp Realty
📱 +34 692 882 030
Jorge Cifre
Personalised real estate and financial advice in Pollença
With solid experience in the real estate and financial sector, Jorge Cifre specialises in offering personalised advice tailored to the specific needs of each client. As a resident of Pollença, his in-depth knowledge of the area makes him the ideal choice to guide his clients in the purchase, sale or rental of properties.
Jorge Cifre combines professionalism, trust and a friendly approach to ensure success in every transaction. He is committed to helping each client find their dream property or the financing they need in an efficient and secure manner.
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