Guide to applying for a Spanish Mortgage
1) Once you have decided on a property, you’ll need to sign the Contrato de Compraventa and transfer the initial deposit to secure the property. Mortgages in Spain has a free currency transfer service (provided by Manor Finance, a subsidiary of Global Currency Exchange Network).
2) Your appointed legal representative or estate agent will need to obtain a NIE number for you.
3) You’ll also need to obtain a Nota Simple from the land registry.
4) Your completed mortgage application will need to be submitted to BIM with required supporting documentation in order to obtain financial approval.
5) Upon receipt of a positive valuation report from the bank’s appointed surveyor, you’ll obtain full approval for your mortgage application. The lender will send you a Mortgage Offer Letter, confirming the terms & conditions of the mortgage.
6) We recommend you set up an International Regular Payment Plan with Manor Finance to cover your monthly mortgage repayments and utility bills etc. This will allow you peace of mind by ensuring your payments are always met without you having to physically make a transfer each month.
7) The purchase price balance and legal fees will need to be transferred to your Notaire using Manor Finance.
8) Finally, you’ll need to attend the mortgage completion at the Notary’s office. If you’re not able to be present, you’ll need to arrange a Power of Attorney to do this on your behalf. The Notario will register your mortgage and release the funds to the designated beneficiary.
Eligibility & Qualifying Criteria
All Mortgages in Spain are in Euros and will be secured on your Spanish property. As Spanish Mortgages are full status, proof of your income and outgoings will be required in order to gain mortgage approval.
The maximum loan to value available is generally around 60% of the value of the property and some lenders will include fees.
Spanish lenders will assess your eligibility based on your capacity to repay the loan. As a general guideline, your existing monthly outgoings and the repayment on your Spanish mortgage should not exceed 35% of your net monthly income. A percentage of rental and investment income can also be considered. Mortgage, rent, personal loans, credit card payments, child maintenance and alimony commitments, are all considered as outgoings. Speak to us directly or complete our mortgage application to find out the maximum amount you’d be able to borrow.
Spanish Mortgages on different types of Properties
Mortgages can be obtained for the purchase of off-plan, new or existing properties.
Spanish lenders will consider applications in the name of an English or Spanish Company. This is not widely available and will be at the lender’s discretion.
For construction loans, plans must be provided at the time of application. You will need to be the owner of the land before applying for the loan. Funds will be released by the lender directly to your builder in accordance with the plans and following the bank’s valuation to ensure the agreed stage has been reached.
Capital raising is available on your property in Spain and the amount you can borrow will be determined by a valuation arranged by the lender. The purpose of the release of funds needs to be disclosed upfront, although many lenders will not follow up on this at completion.
The refinance of your existing Spanish mortgage in order to take advantage of a more competitive interest rate is possible. However, refinancing will incur both costs at the Notary office and with the new lender. Certain lenders may offer to cover these costs, making the proposition more attractive.
Spanish Mortgage Products
A variety of products are available ranging from capital repayment mortgages or a combination of capital repayment and interest-only on a variable or fixed-rate basis or a combination of both. Most mortgage rates are indexed against the Euribor. Terms can be from 5 to 40 years. However, loans must be repaid by 70 years of age. Many of our products do not have any early redemption penalties. For an initial idea of rates and monthly repayments, use our quick quote online mortgage calculator, or else complete a personalized quotation request form and we will send you a tailored quotation.
A decision in principle can be obtained from a lender once all the requested documentation has been submitted. This takes approximately 5 working days.
A minimum of 6 weeks should be allowed from application to completion.
Spanish lenders are legally required to request full documentation proving that the borrower can afford the mortgage repayments, and therefore you will be required to submit a significant number of supporting documents. However, many Spanish lenders will also carry out a credit check to confirm your outgoings here in the UK, and in many cases this will reduce the number of documents required. Please see below for a summary of what will be required. A detailed list will be compiled based on your situation and sent to you with your personalised quotation.
* Proof of identity & residence
* Proof of income & outgoings
* Bank statements
* Property details
Our guide to applying for a Spanish Mortgage is only that… “A guide”. It is not the definitive list. Please contact us, and we will do our best to help you gain a Spanish mortgage.
Buildings insurance is mandatory and needs be in place for completion. Most lenders offer their own buildings insurance and if their provider is not used, they will require proof that the policy has been assigned to them. Baydonhill Insurance can provide you with a quote for this.
Life assurance is strongly recommended but not obligatory with all of our lenders.
Spanish Bank account
Most lenders will require you to have an account open with them.
Spanish Monthly Mortgage Repayments
Please be aware that missing a monthly mortgage payment may have serious consequences and we therefore strongly advise participation in our overseas payment plan. This service gives you peace of mind in the knowledge that your Spanish mortgage repayments will be met automatically each month.
Mortgage funds will be released by the lender to your Notary for completion of the purchase.
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