Early Repayment Spain

What does an early repayment achieve in Spain, and what may it cost?

An early repayment — in Spanish amortización anticipada, the early repayment of part or all of the loan — is your legal right in Spain: Art. 23.1 of the Ley 5/2019 permits it at any time before the agreed end of term, without the bank's consent.

In principle, the bank may not charge anything for this. Only in the exceptional cases named in the law itself, and only if it's stated in the contract, can compensation apply — and even then the percentage is not the amount they're allowed to collect, but one of two upper limits. The calculator above shows you both: the interest savings and the sum of the percentage caps calculated per instalment.

How it's calculated

The repayment schedule

The basis is the cuadro de amortización, the repayment schedule that your bank hands you as a table. It follows a loop that repeats month after month: the interest portion is the outstanding balance multiplied by the borrowing rate (TIN, tipo de interés nominal — the nominal interest rate without additional costs) and divided by twelve. Whatever remains of the monthly instalment, the cuota, after that, reduces the outstanding balance. The following month, the interest portion is therefore smaller, and the repayment portion larger.

The instalment itself is the annuity: the amount that brings the loan to exactly zero over the agreed months at a constant interest rate. The model behind this: twelve equally long months, the first instalment one month after disbursement, one interest rate over the remaining term. Day-precise interest counting and interest rate adjustments are set out in your deed and in the FEIN (Ficha Europea de Información Normalizada, the European standardised information sheet that the bank must hand you before signing the contract).

The effect of the early repayment

The early repayment is booked after the regular instalment of the same month and goes in full against the outstanding balance; from the following month, the schedule continues to calculate with the lower balance. If less remains outstanding than desired, the calculator only books the remainder — the loan is settled.

What happens afterwards is decided by your contract, not by law: either the instalment stays the same and the term is shortened (reducción de plazo), or the term stays the same and the instalment is reduced (reducción de cuota) — then the annuity is recalculated based on the reduced balance and the months remaining until the original end date. Which variant applies is not set out in the Ley 5/2019, but in your loan agreement. The calculator offers both routes, because it cannot decide this question for you.

What the early repayment is allowed to cost

The possible compensation is called compensación or early repayment fee — the early repayment penalty. Art. 23.4 of Ley 5/2019 prohibits it in principle and only allows it in the following three paragraphs, each with its own rate and its own period. It still has to be agreed: if nothing is stated in the contract, you owe nothing.

The point most often misrepresented: The percentage is not the amount the bank is allowed to demand. Each of the three paragraphs caps it twice. The compensation may neither exceed the bank's actual interest loss — the pérdida financiera, the financial loss that the repayment actually causes it — nor the respective percentage of the capital repaid. What is owed is the smaller of the two values. The pérdida financiera requires, under Art. 23.8, a market rate specified in the contract and cannot be calculated without it. The calculator therefore states only the percentage cap before checking the financial loss — not the permissible final amount. If interest rates have risen since your contract was signed, the bank's loss is often significantly lower than that.

The field for the agreed compensation starts at zero. This is a neutral assumption for the calculation, not a legal statement: what has been agreed is stated in your contract and in the FEIN — enter it there. If your value is above the percentage cap, the calculator says so without overwriting the input.

Worked examples

The amounts are deliberately not given here, but in the calculator. Three scenarios are worthwhile:

• Without versus with early repayment. Leave the default entries as they are and compare the two columns of the schedule: same instalment, shorter term, less interest. The toggle above the table shows the same difference row by row.
• Shortening the term versus lowering the instalment. Enter the same amount, just switch the effect. Shortening the term usually saves more interest, lowering the instalment creates monthly breathing room.
• One large payment versus several small ones. Set the annual early repayment to zero and instead enter a one-off payment. The earlier it falls, the stronger its effect — the outstanding debt is at its highest at the start.

Also change the contract date and the fixed-rate period: both control the percentage cap, which the calculator computes for each date and presents as a total, because it changes over the years.

Special cases

Fixed rate, variable rate, and switching between them

For a fixed-rate loan, a rate of 10 applies for the first 2% years, then 1.5% afterwards. For a variable rate, the contract may only provide for one of two regimes — the law calls them excluyentes entre sí, they are mutually exclusive: either 0.15% in the first 5 years or 0.25% in the first 3 years. After that, no compensation is permitted for variable-rate loans.

A special case is switching from variable to fixed — through novación, a contract amendment with the same bank, or through subrogación, a change of creditor, where another bank takes over your mortgage. For this, a rate of 3 applies in the first 0.05% years. Choose the regime in the calculator that matches your contract, not the cheapest one.

The suspension only applied to variable-rate loans

For variable-rate loans, compensation was suspended entirely for a while: Real Decreto-ley 19/2022, as amended by Real Decreto-ley 8/2023, ordered that none arises during this window. This did not apply to fixed-rate loans — the wording refers only to variable-rate loans and only to the relevant paragraphs of Art. 23. Many guides blur this distinction. You don't need to look up when this window was: if you enter a date from it, the calculator will show a limit of zero for the variable regime, along with the version it calculated by.

Contracts from before the LCCI

The LCCI — the abbreviation for Ley 5/2019, the Spanish law on real estate credit agreements — applies to contracts from its entry into force onward. If your mortgage is older, any compensation is governed by the law in force at the time and by your contract. For this contract, no Art. 23 percentage limit is available from the register. The entered compensation is still considered as a scenario assumption. The repayment schedule and interest savings remain accurate, as they don't depend on the date.

Repayment, and what the calculator leaves open

If you pay more than what's outstanding, only the remainder is booked and the plan ends. For full repayment, the same Art. 23 applies, which refers to total o parcialmente. Bear in mind: the mortgage remains registered in the land registry until it's explicitly cancelled; this incurs a separate cost and is not included here.

The calculator does not answer whether investing the money would be more worthwhile — that would depend on an investment return that no one can seriously predict. Tax effects are also left out: if you rent out the property, loan interest may be deductible under certain circumstances, and an early repayment reduces precisely this deduction.

Deadlines and forms

The notice. Art. 23.1 allows a period for prior notification to be agreed — no more than 1 month. If the contract says nothing, you don't need one. Otherwise, notify in writing which amount you want to repay when and whether the term or the instalment should be reduced, and get confirmation of receipt. After that, the bank owes you a statement of the consequences within a few working days.

The deadlines under Art. 23 run to the exact date from the contract's signing, not by calendar years — the anniversary itself still counts within the period. Close to a cut-off date, a single day can change the applicable rate; that's why the calculator asks for the contract date.

Two documents accompany the process: the FEIN, in which the compensation must be stated, and the amortisation schedule, which the bank issues afresh after each early repayment. Compare it with the table above — instalment, interest, principal repayment and remaining debt per month, month by month for the first year, then one line per year, with the total sum at the end. The calculator deliberately adopts this structure from the FEIN, so that you can place both side by side. If the bank deviates, ask for the reason.

Legal basis and status

Article 23 of the Ley 5/2019, reguladora de los contratos de crédito inmobiliario (LCCI), consolidated version, is decisive: paragraph 1 on the right to early repayment and the notice period, paragraph 4 on the fundamental prohibition, paragraphs 5 to 7 on the exceptions, paragraph 8 on the pérdida financiera. In addition, the disposición adicional primera of the Real Decreto-ley 19/2022 as amended by Real Decreto-ley 8/2023 for the suspension in the case of variable interest, and Anexo I of the Ley 5/2019, from which the structure of the amortisation schedule in the FEIN derives. The source is the consolidated text at boe.es.

Every value in the calculator can be expanded and traced back to its source. Inputs without an underlying legal provision — remaining debt, nominal interest rate, remaining term, early repayment, effect and agreed compensation — are contractual content and marked as an assumption. The result is a model calculation; it replaces neither your bank's statement nor advice for your individual case.

Related calculators

If you're first looking for the instalment for a planned loan, calculate it with the Mortgage calculator for Spain — it provides the annuity you can continue working with here. What taking out the mortgage costs, and which part of it the bank bears under the Ley 5/2019, is covered under Mortgage ancillary costs in Spain.

And if you're checking what purchase price your financing can support, the Purchase budget for non-residents can help: it adds up equity, loan and purchase ancillary costs.