The applicant's age and the repayment period
As well as the default risk, the applicant's age naturally determines the mortgage repayment period. The older the applicant, the shorter the repayment period will be. And the shorter the repayment period, the higher the monthly instalments will be.
What other guarantees do banks require?
In Spain, as we have already mentioned, banks rarely grant mortgages to people over the age of 75. The conditions for older customers are slightly different from the conditions for younger applicants.
Most banks will require the applicant to take out life insurance. In the case of a younger person with a certain level of income, they may also require a guarantee to minimise the risk.
But it's not all about risks. In fact, older applicants have certain advantages such as a fixed monthly pension, which implies financial stability. And if the state pension is supplemented by a private pension plan or extra income such as rent from a property, the situation is even more favourable. Other cases, such as owning a property or having savings in investment funds, can also help to reduce the instalment if necessary.
Although each case is analysed on its own merits, it's important to bear in mind the recommendations of Banco de España when applying for a mortgage. For example, the mortgage term should not exceed 30 years and you should not have to allocate more than 35% of your monthly income to your mortgage payments.