Spanish mortgages to buy property in Spain
Over the past 10 years it has become much easier to arrange a Spanish mortgage. Banks have adapted to the large number of foreigners buying property in Spain and have become much more flexible as a result. There is still not a huge choice of mortgages for Spanish property on the market although the number of products available has increased greatly.
How do I find a Spanish mortgage to buy my property in Spain?
Spanish mortgage rates obviously vary but are, in general terms, lower than in the UK. There is fierce competition between banks, something which customers may be able to use to their advantage.
Try and play banks off against each other. Ask for a copy of one offer and then take it to a different bank. If they can improve the offer, take it back to the original bank to see if they will go further.
You may find developers and banks have struck deals. If you are interested in a Spanish property yet to be built you may be left with little choice. However, if that is not the case then it is advisable to shop around for the best deal.
There are also UK banks in Spain and they have introduced more features of UK mortgages to the Spanish property sector whilst still offering low European interest rates. There may be other advantages and conveniences to going for a lender affiliated with your bank at home.Spanish banks will charge a one-off set-up fee of between 1 and 2%.
Types of Spanish mortgage available to buy property in Spain
Most Spanish mortgages are repayment mortgages based on a variable interest rate. There are some fixed-rate and interest-only Spanish mortgages available but these remain rare. Self-certification and guaranteed non-status Spanish mortgages are not available.
If you do sign up to a fixed rate Spanish mortgage the interest will be higher than with a variable rate product although it is possible to fix it for up to 15 years.
The range of Spanish mortgage products is growing all the time although there are still relatively few on the market.
If you intend to rent out your Spanish property then income generated this way will not be taken into account by banks in Spain. You will need to produce wage slips from the last three months and bank statements from the past six. Non-residents may have to provide a guarantor who is resident in Spain. You will also need your NIE number before being given a Spanish mortgage on a property in Spain.
Other documentation you would be required to produce includes:- Your last P60
- A copy of your Inland Revenue tax calculation if you have one
- Annual accounts for the past three years
- Copies of the last three years’ Income Tax Calculations
- Bank statements from the past three months
What else should I know about Spanish mortgages?
- The range of Spanish mortgages tends to be 60-80% of property price over five, ten, 15 or 20 years.
- Currently the Spanish mortgage rate stands at about 4.7% (summer 2006) and an early write-off fee of around 1% is usually in place.
- Your monthly Spanish mortgage fees should not exceed one-third of your net income.
You should allow between five and seven weeks from application to funds becoming available. Also bear in mind that payments towards your Spanish mortgage will be made in euros and not sterling. As a result you are exposed to any exchange rate fluctuations which can greatly affect the cost of your property in Spain. There are other options of how to secure a mortgage on your Spanish property.
