Amortizing in Spain: Reduce Term or Monthly Payment?

Note: This content is specific to the Spanish mortgage market.

If you have extra cash and want to pay down your Spanish mortgage early, the bank will ask: "Do you want to reduce the quota (cuota) or the term (plazo)?"

1. Reducing Term (Plazo)

You keep paying the same monthly amount, but the loan finishes earlier (e.g., in 15 years instead of 20).

• The Math: This is the optimal financial choice. By eliminating future years of the loan, you eliminate years of interest accumulation. You save the maximum amount of money.

2. Reducing Installment (Cuota)

You keep the same end date, but your monthly bill drops (e.g., from €1,000 to €850).

• The Psychology: This provides safety. If money gets tight later, you have a lower obligation. It improves your debt-to-income ratio for future loans.

Recommendation

• To maximize wealth: Reduce Term.
• To maximize peace of mind: Reduce Installment.

👉 Spanish Amortization Calculator