All About Spanish Mortgages

Despite well-reported difficulties in the Spanish Mortgage market lenders are still lending and property prices are currently very realistic in Spain with most sellers willing to negotiate with buyers.

To strengthen your negotiating position you can ensure before you look at property you have a mortgage approval in place. Whilst a full application will still have to be undertaken when a property is found you will know before you go house hunting, maximum budget, what the whole purchase and mortgage process is going to cost, and have the confidence that the loan required will be approved for completion. We can make sure you will have access to sufficient cash deposits to complete the transaction with no nasty surprises at a later date. Being fully prepared will enable you to negotiate hard with sellers in the knowledge you are in a strong position to buy making sure if you want to move quickly your deposit money is going to be protected.

All this takes is one call to us and a little bit of your time.

Spanish Mortgages market overview (Purchase)

• Spanish mortgages are available for non-residents up to 70% of value.
• Most banks now link to 70% of valuation or purchase price whichever is lower but a couple of banks will still provide to clients on a case-by-case basis up to 100% of purchase price if valuation level allows and loan to value does not exceed between 60% to 70%.
• The majority of the Spanish Banks have dropped loan to values to 60% for non-residents so to access the widest choice of lender and product 40% cash deposits plus costs will be required.
• Spanish mortgages are normally variable trackers. Most lenders link to the 12-month Euribor and then charge a fixed margin above. Your rate is determined by the Euribor being used within the month you complete plus your margin above. The Euribor rates for completions and reviews within each given month are published to the banks by the bank of Spain on the 5th of each month.
• If you are linked to a 12-month index it is highly likely your interest review against prevailing Euribor will take place once a year. This provides stability of payments for a full 12 months and protects in the short term against Euribor increases. In a decreasing interest rate market, however you will have to wait for your next review to feel the impact of any drop in rates.
• For clients who prefer to be linked to shorter term reviews a few banks use 3-month indexes and monthly indexes.
• Limited access to interest only to take pressure off early years is still available.

All loans are full status at present. This means full paperwork will be required by the bank to assess the application. Most banks work on debt to income ratios and assess you against net incomes as seen on latest tax documents. All banks will want to see your liabilities in country of residency and will check that total debt repayments including new loan do not exceed a set percentage of your after tax incomes.

For a realistic view on what you could borrow, mortgage costs and what rate you could anticipate achieving contact us today.