You can apply for a mortgage in Spain in much the same way as you would do in your home country. However you will probably have to contribute a large deposit of at least 30 to 40% of the total price of the property. The mortgage lender will furthermore expect you to prove your income to ensure that you are in a position to pay. A mortgage cannot be taken out for longer than 30 years and must be repaid by retirement age.
As well as the additional cost you will incur by paying your Spanish mortgage there will be an administrative cost which is applied by the mortgage lender, often up to 2% of the mortgage itself.
Once you have decided you would like to apply for a mortgage and how much you need to borrow then the following process will begin:
1. You will need to provide basic information to the mortgage provider. This includes:
At this stage it isn’t necessary to provide them with the proof, just the details for them to work on.
2. The mortgage provider will then review your details and match them against their minimum criteria. If this is met, they will provide you with an initial, provisional offer and you will need to supply proof of income if you wish to go ahead.
You can expect it to take between one and two weeks for the income information to be approved. Once cleared, the property must be valued by the bank to confirm the purchase price.
Once the valuation has been made, the mortgage is ready to be signed at a Spanish Notary. This must take place within the following four weeks for the mortgage still to be valid. After this time, updated income information may be needed.
The signing of the Mortgage Deed in Spain takes place at the same time as the signing of the Title Deed. After the signing, the Notary will send an electronic version of the Title Deed and the Mortgage Deed to the Land Registry.
If you find that at some point in the future you are in a position to pay off the mortgage, you should first check to see if there is an early repayment charge. Then the total needed should be transferred to the bank account and the bank informed that you wish this money to be used to repay the mortgage.
Once this has been completed there is an additional second step you must carry out. You will need to inform the Spanish Land Registry as if this doesn’t happen then it will still be registered on the Deed that you owe money against the property.
In order to be sure that the records are in order, you need a representative from your mortgage holding bank to sign the Mortgage Cancellation Deed at the Notary Office. This can then be sent to the Land Registry.
If you require a mortgage against your property in Spain, you are welcome to contact any foreign representative, bank and/or us if you want to discuss best possible options. If you are already making your own arrangements, a date by which you expect to have the funds available might be useful in the negotiations with the vendor.
As a non-resident purchaser in Spain you may obtain a mortgage of up to approximately 70% of the bank’s valuation of the property. A resident or national purchaser may obtain up to 100% of the valuation (when purchasing repossessed property from a bank). Under such circumstances the property purchased in Spain would act as guarantee for the mortgage. Both variable and fixed rate mortgages are currently available.
The fact that mortgages are now more available has helped a blossoming property market. With low interest rates and good exchange rates on most currencies, buying a property in Spain has become an attractive investment over the last years.
Do you have any questions feel free to contact us and we will get back to you shortly