Spanish Mortgages Made Simple
Here at Vidorra Property we like to make things as easy and seamless as possible. Here’s the key facts you need to know about purchasing your spanish property.
Loan to Values
Mortgages for non Spanish Nationals buying in Spain are available up to 70% loan to value. For non EU tax residents the maximum loan to value may be restricted to 60%.
Spanish Banks work on affordability ratios based on net incomes as declared on personal tax returns or total income if the applicant lives in a non taxpaying jurisdiction. The Spanish Banks look to see that that in general the percentage of net incomes being utilized for debt payments does not exceed around 35%.
Validation of incomes and debts is required on formal documentation which will include tax returns, Bank statements and personal credit fles where these are available. For self employed applicants company data as well as personal data will be requested.
Types of Loans
Most Spanish loans are variable trackers tracking the 12 month Euribor. It is normal for Spanish banks to charge a frst year premium fxed rate reverting to the variable in year 2. Each Bank charges a margin above the Euribor which remains static for the lifetime of the loan and review the rate against the published 12 month Euribor once a year on the anniversary of completion.
Some fxed rates are available but fxed rates are not a standard offering Spain.
Interest only is not available in Spain all loans are on a repayment basis.
Early redemption penalties are restricted by law in Spain and for variable products cannot exceed 0.50% in the first 5 years and 0.25% thereafter; this is for full and partial overpayments.
Spanish Mortgage Terms
Terms of up to 30 years are available although the standard is 25 years and Spanish Banks have age restrictions of up to age 75 years as a maximum.
All mortgages in Spain come with compulsory products attached, as a minimum this is a Bank account with the Bank and buildings insurance but in most instances life cover contracted with the bank will also be required.
Spanish Mortgage Costs
Costs associated with taking a mortgage in Spain will include valuation fee, bank administration fees, notary and land registry fees and mortgage deed tax. Apart from the Bank fee, which can vary from Bank to Bank, all other costs associated with a loan are not Bank specific fees but form part of the securitization costs applicable to all lending.
Spanish Mortgage Advice & Financial Approvals
Because part of the buying process in Spain usually requires some monies are passed before completion it is usually good advice to put in place, before committing to a purchase, an approval in principle to the borrowings required in order to complete.
It is wise to get experienced and professional independent advice to ensure you have the best possible options available to you, a clear and concise view of the costs and a detailed understanding of the Spanish mortgage market.
For unbiased advice, budget analysis and a no cost and no obligation full financial approval service you can contact our partners International Mortgage Solutions SL via;