MortgagesGuide to Spanish Purchase Mortgages - Mainland Spain and Canary Islands
Loan to Values
Non-resident mortgages can be sourced up to 70% of valuation. With most lenders this will be 70% of valuation or purchase whichever is lower, although one bank still allows a loan up to 80% of purchase price if valuation level allows. For widest choice of lenders and product most lenders are currently maximum 60% of valuation.
Spanish mortgage products are generally of a variable nature linked predominately to the 12 month Euribor.
There is some access to interest only facilities for the first few years of a mortgage ranging from 2 to 10 years.
A few lenders have the facility to provide the loan in currencies other than Euros these currencies can be selected from sterling, Swiss Franc and USA Dollar.
Terms from 15 to 40 years are available but most lenders will look for the loan to be paid off by age 70 to 75 years.
Redemption penalties for full early repayment by law cannot exceed more than 0.50% and most banks allow overpayments of the loan without penalty.
Your initial interest rate is determined by the Euribor or index selected plus the fixed margin the selected Spanish bank is charging and this rate is then retained until your first review. At your review, the bank adjusts your rate based on the underlying index and your fixed margin above. Because most lenders link to the 12-month Euribor rates are reviewed in general once a year.
Costs
All Spanish banks will charge and arrangement fee for your Spanish Mortgage. You will also need to allow for valuation fees, Notary and Land registry fees, mortgage and mortgage deed (escritura) tax.
Costs are a percentage of what you borrow or valuation level so to check how much it would cost you for a mortgage in Spain contact us now for a free written quote. All costs apart from valuation fees are taken at completion.
In total when buying a Spanish property as a general guide you should allow 10% of purchase price to cover all purchase, legal and finance costs on top of the net purchase price you have agreed.
Equity release and re-mortgaging
Both equity release in Spain and a re- mortgage of your existing Spanish mortgage are possible.
Re-mortgaging can be costly and complex but a few lenders will assist or cover the costs of any move.
Equity release on a property owned in Spain is possible up to 60% of valuation. Most lenders will only allow equity release if the money is to be spent on the property in Spain but a few will release cash to be used for any purpose.
Underwriting Criteria's
Each bank has a different approach to risk and different ways of calculating and assessing how much you can borrow.
As a guide most banks work on debt to income ratios and will look to see that your overall debt payments do not exceed between 35% to 40% of your after tax incomes.
In Spain banks will accept an income guarantor who is not on the purchase deed if you need extra incomes assessed to obtain lending required.
Document requirements
All banks will require at this current time a fully packaged mortgage application which will include the following documents
Employed
Last 3 months pay slips
Last 3 months bank statements
Employer's reference
Latest P60
Copy of UK credit file www.creditexpert.co.uk
Self Employed
Accountant's reference
Latest self assessment tax return in full
SA302 if applicable
Up to 3 years certified accounts
Last 3 months personal bank statements
Copy of UK credit file www.creditexpert.co.uk
If you are ready to get pre approval from our finance and mortgage provider you can complete the form here, alternatively you can contact us for more details or request a call back from one of our representatives to discuss in detail your needs.
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