Mortgage in Spain.

Mortgage in Spain.


Information about mortgages in the Costa del Sol, Andalucia, Spain, Many banks in Spain are ready to give a mortgage for the purchase or construction of property in Spain.

We strongly recommend that you start the mortgage process in advance; before finding your property.

Many banks in Spain are ready to give a mortgage for the purchase or construction of a property in Spain.

The amount of the mortgage is from 50-60% of the property value and the loan terms from 5 to 30 years at 3.5 – 5% per year, depending on the bank. You can choose a monthly or quarterly payment form. In case of early repayment of the loan shall be charged from 0% up to 1% of the outstanding amount, depending on the type of loan. In Spanish law, the amount paid shall not exceed 30% of monthly income.

There are several types of mortgages in Spain:

· With a fixed interest rate – a fixed amount is paid out over 12 years, after 12 years the amount is recalculated.

· Floating interest rate – the interest on your mortgage will depend on the financial market, according to the official rate of EURIBOR. The recalculation is done either quarterly or annually.

· Secure payment – throughout the period of the mortgage a fixed amount is paid, regardless of the official exchange rates.

Documents necessary for getting a mortgage in Spain:

Employed:

People in employment (or who are retired) will usually be asked to provide the following documents:

•             Last P60

•             Last 3 pay slips

•             Last 3 months bank statements

•             Employers reference

•             Passport

•             NIE number (can be provided after mortgage application is made and approved but BEFORE completion)

Self-employed:

People who are self-employed will usually be asked to provide the following documents:

•             Last Self Assessment Tax Return

•             Last 3 months bank statements

•             Chartered Accountants Reference (we have a format which the banks will accept)

•             Last Company Accounts filed (if applicable)

•             Confirmation that corporation tax is up to date (if applicable)

•             Passport

•             NIE number (can be provided after mortgage application is made and approved but BEFORE completion)

Mortgages here are usually issued for 5-25 years, in some cases up to 30 years. For those who are not citizens in Spain, the size of the mortgage is typically 50-60% of the appraised value of the property purchased. It often happens that the official assessed value of the property, the appraiser determined that the bank is higher than the actual purchase price stipulated by the seller and the buyer. In this case, the size provided for the mortgage as a percentage of the purchase price is also higher.

Interests rates on mortgages fluctuate currently are at about 2.75% annually. The time limit for a mortgage is usually from 2 to 3 weeks. The size of monthly payments on a mortgage in Spain cannot exceed 30% of the monthly income of the borrower. Therefore, the figures appearing in the documents of income must be relevant. In the case of a married couple buying a property are encouraged to submit all the documents of both of the spouses. It is not necessary but desirable, as banks consider it a positive factor. It does not matter if the buyer wants to arrange a mortgage and property in the name of someone – husband or wife. The position of the bank is clear: if one spouse for some reason cannot work, at least temporarily, the family would still have money to pay the mortgage.

The process of obtaining a mortgage:

• Opening a personal account in a Spanish bank, only takes 15-20 minutes. A valid passport is required.

• Provide the bank with documents of your income.

• Determination of the estimated value of the purchased property, which is provided by a specialized firm working with the bank. Property valuation and preparation of the final document takes about 7-10 days. This process runs in parallel with the translation of documents into Spanish.

• Review of documents prepared by the bank and the decision to grant a mortgage. Term – approximately one week.

• Transfer to your personal Spanish account the remaining amount, i.e., 60-50% of the purchase price, depending on the conditions of the credit transaction and assessed value of real estate. Not necessarily, but it is very desirable to transfer the money before the banks are willing to review documents, as well as the availability of money in the account at the time of the decision to grant a mortgage is an important argument.

As for the property deed, a mortgage contract is signed in the presence of a Spanish notary, after it is registered in the State Register.

We can help you find a financial advisor that will look after your interests and will advice the best for you on your mortgages in Spain.