En Español
New mortgages products
100% mortgage - Multi currency mortgage
Mortgages in Spain
Spanish Home Insurance- Contents and Buildings insurance in Spain- Spanish Motor Insurance- Life Cover in Spain
Specialists in non-resident mortgages and re-mortgages in Spain
Mortgages
If you would like to receive more information or advice, please complete the form below and one of our mortgage advisors will contact you shortly:
Mortgages in Spain
Most buyers in Spain, residents and non-residents alike, purchase their property with a Spanish mortgage loan. There are many products available, and several considerations to make before deciding on which Spanish mortgage to opt for. Furthermore, recent changes in the market and increasing interest rates have sparked debate about whether it is still advisable to purchase with a Spanish mortgage at all (click here for European interest rates). We have used our in-depth knowledge and experience to put together this informative introduction to the current mortgage climate, the future of Spanish mortgages and the advantages and disadvantages of borrowing in Spain to assist you in your decision.
The Spanish Mortgage
It makes sense to have your mortgage in Spain if your property is in Spain, especially if you are renting your property out as it is practical to have your rental income in the same currency and location as your mortgage payments. In spite of recent increases, the mortgage interest rates in Spain are still lower than in many other European countries (click here for today's Euribor rate), the products are slowly but surely developing to include previously unavailable features such as long interest only periods, non-status applications and low early repayment penalties, and there can be various tax advantages to financing your purchase with a mortgage loan; "wealth tax" and inheritance tax among them.
Obtaining a Spanish mortgage can be a relatively smooth and effortless process if done correctly, but the Spanish mortgage market can also be a daunting and rather disappointing place to those who are not familiar with it. It is very much a developing market and lacks the structure and efficiency of many of its European counterparts. The UK and US markets are particularly advanced in comparison, offering sophisticated products, excellent turnaround times and clearly defined conditions as standard, which many buyers expect to have available to them in Spain. Unfortunately, this is just not the case.
Most non-resident mortgages remain fairly inflexible and antiquated. Every bank has its own policies and limitations to which it sticks like glue and which invariably bear little resemblance to those of the next bank. This means that, in order to find a suitable lender, buyers often have to labour through a great number of financial institutions all the while enduring communication difficulties and unacceptable waiting times. As a result, applicants quite often settle for a lender offering little more than English speaking staff and reasonable service, thereby not achieving the best mortgage product available to them.
The other problem is that Spanish banks often only fully understand Spanish mortgage applications, and are unfamiliar with the documents provided by non-resident applicants. As a result, many lenders either shy away from taking on the cases altogether or misunderstand the client's circumstances and under-qualify them. Income via dividends, commissions, self-employment, offshore earnings etc. are all objectionable in the eyes of some Spanish risk departments whereas they are perfectly acceptable sources of income back home.
Using a broker to arrange your Spanish mortgage
Using a broker can alleviate these inconveniences, offering a mine of information, removing the need to approach scores of lenders, as well as providing an unparalleled level of service in your own language. A good broker will assess your needs and, from the hundreds available, find you a suitable mortgage product accordingly. They will translate as required, chase, problem solve, negotiate, argue and undertake all other unsavoury tasks required for the acquirement of a good Spanish mortgage deal, saving you the hassle and discomfort of doing it yourself. They will also have a good relationship with the banks so client circumstances that veer from the standard salaried income the Spanish lenders love so much will be viewed with considerably less suspicion than an application submitted directly by the client, a relative stranger.
Buyers should, however, be wary of brokers who prey on the inexperienced and impose high arrangement fees and offer uncompetitive mortgage products for the benefit of their own pockets and forsaking their clients' best interests (Tienda Hipoteca do not charge for services. For details, click here. It is therefore advisable to do some research before approaching a broker to avoid being taken for a ride- even the largest and best known intermediaries are not necessarily trustworthy.
The Future of the Spanish Mortgage Market
All problems taken into account, Spain's mortgage climate is in a period of great and constant transition. Some lenders have wised up and finally recognized the potential bubbling under the surface of the non-resident property market. With so many people purchasing holiday homes in Spain, any lender willing to offer the service and sophisticated products reminiscent of their own country and expected by such clients, will invariably benefit; and a handful of banks are doing just that.
They are establishing specialised non-resident departments that bypass the comparatively narrow-minded Spanish risk departments. These departments employ multi-lingual, highly trained staff who are able to assess cases with a broader outlook, taking into consideration all circumstances and offering much more flexible client qualification, so even the most complex of circumstances will be looked at realistically. This should open up a whole new window of possibility, allowing those who previously did not qualify for a Spanish mortgage to obtain one far more easily. Spanish banks have also realised that clients expect quick and efficient service and many are fighting to overturn the "manana" attitude of the past.
Tienda Hipoteca
It is possible to find a great deal on a mortgage in Spain provided you have the experience and knowledge to select the best lenders and most suitable mortgage products. That is exactly what we do at Tienda Hipoteca. We offer excellent customer service, provide honest information and we do not charge an arrangement fee (for deatils click here)
Spanish Mortgage Procedure
Paperwork Collection
Every lender requests slightly different documents from applicants, but the following is a generic list which forms the basis of most banks' requirements. As the first stage of the mortgage procedure, we will ask you to send us these documents for initial assessment (copies are usually sufficient).
- Last 3 months pay slips (or equivalent)
- Last 3 months bank statements showing regular income
- Last P60/ tax return
- Passport copy
Financial assessment by broker
Your qualification will, again, vary according to the lender. In most cases, 35% of your net monthly income will be taken into account and your lending budget calculated accordingly.
We will look at your financial profile and match it to the Spanish mortgages we know you will qualify for.
We will then look at your priorities (e.g. long interest only period, low interest rate, no early repayment penalty etc.) and isolate the best products for you.
We will usually select a few options and send your application to these lenders, requesting further paperwork from you if necessary.
Approval in principle
We will then liaise with the lender on your behalf to negotiate the best conditions and to avoid delays. Some banks will send the case to a centralised risk department for approval, some will provide it from the branch.
Most Spanish mortgage lenders (there are some exceptions) will then provide what is called an "approval in principle". This means that your financial status is acceptable to them and that you qualify for the mortgage amount requested on the basis of your income and expenditure.
Valuation
All Spanish mortgages are offered subject to a recent bank valuation. Every bank has a panel of acceptable valuation companies and, in most cases, one will be selected by the bank to perform a survey of the property.
The valuation is calculated according to the square metres of the property by comparison to recent sales prices of similar properties in the area.
The bank will lend you a certain percentage of the valuation figure regardless of the mortgage you requested, even if you qualify for a larger loan on the basis of your income.
Official ("binding") offer
This is a signed document issued by the lender stating the conditions and amount of loan they are prepared to give you. This is "binding", so the bank cannot technically change these conditions after they have been agreed (within a reasonable time frame of course).
This offer will be sent to you and your legal representative and, once you have accepted it, your solicitor will make arrangements for the completion and signing of the mortgage.
Completion
All Spanish mortgages are registered to the property and so have to be notarised and registered, much like a property purchase.
If you are taking out a purchase mortgage, this will be done at the same notary at the same time of the property purchase completion.
For Spanish re-mortgages and equity release mortgages, a notary date will have to be made.
Spanish Mortgage Costs
Obtaining a mortgage in Spain can be costly and buyers should be fully aware of this. Below is a list of fees which relate to signing a mortgage loan, these are approximate figures only. Property purchase incurs further costs which are not mentioned here, neither have we detailed insurance or legal costs as these vary greatly.
- Tax- 1.6% of mortgage amount
- Notary fee- 250-1000 Euros depending on mortgage amount
- Registry fee- 50-500 Euros depending on mortgage amount
- Bank's "gestoria"- 100-400 Euros depending on Bank
- Bank opening commission 0.75%-1.5% of mortgage amount depending on bank
- Valuation fee- 200 Euros to 1000 Euros depending on property value
Types of Spanish Mortgage by Requirement
Non-resident mortgage in Spain
For residents in any country other than Spain, loan purpose must be second residence/ holiday home
This is for people not in possession of a Spanish residency card or certificate and not paying taxes in Spain for 2 years or longer)
Max LTV 70%-80%, max term 30-40 years, max age 75, rate Euribor + 0.6%- 1.5%, max interest only term 30- 40 years
Spanish Resident mortgage in Spain
For residents in Spain, loan purpose must be primary/ second residence/ holiday home
This is for people in possession of a Spanish residency card or certificate and/ or paying taxes in Spain for 2 years or longer
Max LTV 90%-100%, max term 30 years, max age 75, rate Euribor + 0.4%- 1%, max interest only term 2-5 years
Interest only mortgage in Spain
This is a mortgage, or limited period of your mortgage during which you do not pay back the loan capital but just the interest. This makes the monthly payments lower but it means you are not reducing your loan amount. Loan purpose must be primary/ second residence/ holiday home/ equity release
Anyone can qualify for this type of mortgage although it is usually most suitable for clients wishing to sell the property on
Max LTV 60%-70%, max term 30 years, max age 75, rate Euribor + 1%- 2%, max interest only term 30-40 years
No age limit mortgage in Spain
This is a mortgage for clients of any age, so not subject to the usual max age rule of 75. Incidentally, this mortgage is also offered with 30 years interest only and a non-status application)
Anyone can qualify for this type of mortgage although it is usually most suitable for more senior clients who are usually hindered by age restrictions
Max LTV 60%, max term 30 years, no max age, rate Euribor + 2%, max interest only term 30 years)
Equity release
This is a mortgage for residents or non-residents who own a mortgage-free property or have a small mortgage on a property valued much higher. This mortgage will allow you to borrow against the property for refurbishment purposes or in order to finance a further purchase )
Anyone can qualify for this type of mortgage provided your property is either mortgage free or only has a very small loan against it, the property must be legal and owned by the person requesting the finance )
Max LTV 50%-70% (up to 100000 Euros on non-status basis), max term 30 years, max age 75, rate Euribor + 1%-2%, max interest only term 30 years
CUSTOMER TESTIMONIAL
“We would like to thank you for all your efforts in arranging our mortgage.
Your insight into the Spanish system was invaluable and we would recommend your services to anyone wishing to purchase a property in Spain.
Thank you once again.”
RS Nottingham
