Spanish mortgages have an 80% limit of the house value. This means, on average, Spanish workers need to save for seven years to buy a house.
To buy a house in Spain, you have to pay 20% of the purchase price yourself. By putting aside 20% of your income a month, it would take an average of seven years to save enough to buy your own home.
A study by employment agency Adecco, calculated the figure based on the average gross annual salary of €19,692 per annum. They applied the 50/20/30 rule, that is: 50% for fixed costs, 20% for savings and 30% for personal expenses. With a monthly amount of €328 euros in savings, the required contribution is possible.
Better save an additional 10%
According to iAhorro‘s Mortgage Director Simone Colombelli, this calculation is still on the tight side, because there are always additional costs. She therefore advises setting aside an additional 10% of the purchase price for those costs alone. Ileana Izverniceanu of the Spanish consumer association OCU even advises to save an extra 25% to finance all unforeseen expenses.
The amount calculated by Adecco is an average for all Spain. In the big cities, both houses and living costs are more expensive, meaning saving even longer to buy a home. In Madrid, in 2020, the average house price was €2,830 per square metre. Although this is 6.3% lower than the year before, it is still well above the Spanish average of €1,353 euros per square metre (calculated by appraiser Tinsa).
It takes nine years in Madrid
With an average house price of €221,458 in Madrid and an average gross annual salary of €23,568, residents of the region have to save for around nine years. According to Izverniceanu, it is important to pay as large a portion as possible of the purchase price with your own money. This is especially if a mortgage is taken out with a variable interest rate.