Spanish Mortgages

Spanish Mortgage Information

Buying a home or an investment property in Spain has soared in popularity in the last 10 years. The ability to borrow money to do this however has not quite kept pace with the demand from Northern Europeans for cutting edge mortgage products. That said there is a wide and growing range of mortgage products available for non residents of Spain.

Spanish Mortgage Products

Mortgage lending in Spain can be either at fixed or variable rate and on a repayment basis or interest only basis. Spanish mortgages are generally linked to the yearly euribor (European inter bank offered rate) which means that the rate of borrowing against which you pay interest will be reviewed yearly. Through Gibraltarian and Isle of Man banks we can provide mortgages in sterling for Spanish homes.

Loan to Values

Spanish mortgage loan to values are up to 80% for non-residents of Spain. The loan percentage is linked to the mortgage security valuation the lender assesses upon the property you choose not the price you are buying it for.

Equity Release and Re-mortgaging in Spain

Not all Spanish banks will consider allowing you to either remortgage once you have started your mortgage contract with them (you can always consider changing banks however) and releasing equity is again restricted to certain specialised lenders. Remortgageing and releasing equity can be a costly process and should only be done under advisement.
The Bank of Spain controls the activities of lenders in Spain and releasing further funds or changing the terms will incur further tax; bank and notary costs. Under Spanish legislation it may be prudent to mortgage to the maximum you require and include future needs to avoid the enhanced costs later on.

Spanish Mortgage Terms

Spanish mortgage terms range from 5 to 40 years, are age and lender related. It is usual to have repaid the mortgage by age 70 but this can be extended to 80 with some lenders.

Mortgage Costs

All Spanish banks charge an arrangement fee for lending you the money, this ranges from 1% to 2% typically and is payable at the Notary at completion. Other costs including mortgage taxes and some of the deed costs are deducted from your mortgage advance. It is rarely possible to add your costs to the Spanish mortgage unless your valuation level allows you to. You should allow in the region of 12% to 13% of the price of your house to cover your costs in Spain in full. You should contract an independent Spanish lawyer, not one recommended by your agent or developer, to help with the purchase and make sure you are made fully aware of the provision of costs for completion by your lawyer.

Buy Currency

Your Spanish mortgage will be repayable monthly in Euros. To buy Euros at the best rates click here.

Underwriting

Most mortgages in Spain are only granted on a full documentation and status basis however there is limited access to self certified lending. You should not expect the most favourable terms for this type of lending. Spanish banks assess the lending against a percentage of your disposable income unlike UK banks that tend towards lending you a multiplication of your annual income.

Hints & Tips

1. Check your budget and make extensive mortgage enquiries before even travelling specifically to view Spanish property. It would be a wasted trip and quite heartbreaking to see your dream home and discover you cannot borrow the amount you need to buy it.

2. Always use an independent Spanish lawyer to act for you. Do not go on the recommendation of your agent, developer or the seller.

3. Be prepared for hiccups along the way. Spanish law differs from that which you are used to. The Spanish use a Notary system that is long, drawn out and expensive.

4. Do not sign anything until your lawyer has checked the paperwork and your finances are in place. You could end up losing a deposit.

5. Do not get drawn into financial structures such as using companies and offshore havens to purchase the house until you have thoroughly understood the implications of doing so.