PropertyOutlet

Finance

MORTGAGING LIMITS Standard loan to values are up to 80 % for non-resident mortgages in Spain, a percentage that is always linked to the valuation of the property in Spain not to the purchase price. Most Spanish mortgages whilst linked to a percentage of valuation cannot exceed the price declared on the Escritura (title deeds).

PRODUCT ASSORTMENT OF SPANISH MORTGAGES Finance in Spain is predominately linked to a variable rate and on a repayment basis from the start. Spanish variable rate products are generally linked to the yearly euribor (European inter bank offered rate) and your interest rate will be reviewed yearly. Your interest rate for the first 12 months is determined by the euribor at the month of completion plus the fixed margin above that which your selected Spanish bank is charging. Some offshore banks can provide mortgages in sterling secured against your Spanish property purchase, linked to the Bank of England base rate.

There is limited access through banks in Spain to Interest only mortgages and fixed rate Spanish mortgages including a "flexible mortgage plan". Fixed rates unlike the UK tend to be significantly more than the prevailing variable rate and the fixed rate term is generally the total term you can hold the mortgage for.

EQUITY RELEASE AND RE-MORTGAGING IN SPAIN

In Spain under the current legislation it is advisable to raise the maximum funding you require for your current and future needs, as any changes at a later date may not be possible and will be costly. Lender, product and rates need to be carefully selected to ensure they are the most suitable for your needs.

TERM

Spanish mortgage terms range from 5 to 40 years, are dependent on age and Spanish finance provider selected. Most Spanish banks will expect the mortgage to be repaid by age 70, but it is possible to obtain a mortgage in Spain up to age 85.

FEES

All Spanish banks demand an opening fee in case of success. This case of success is given, if you have decided to accept the finance offer of the bank. Most of the costs which arise in connection with the Spanish mortgage, including the taxes to be paid, notary and land registry charges will be deducted in advance from the total of your credit amount.

CURRENCY

If you take a Spanish mortgage with a mainland Spanish bank the capital provided and re-payments will be in euros. Offshore lenders can also take security over your Spanish property and many will provide the funds and take repayments in any major currency of your choice. Your interest rate will be linked to the base rate of the currency you select. For most Euro mortgages this will be the yearly euribor.

BANK CRITERIA

Most mortgages in Spain are only granted on a full status basis. Our cooperation partner IMS (International Mortgage Solutions), being for many years an independent specialist in financing Spanish properties, also arranges legitimate self-certified mortgages. In this case the banks finance a maximum of 60% of the valuation of the property, required by the banks.

Most Spanish banks will assess your income net of tax and will want to see that the combined existing liabilities for property in your homeland and new Spanish monthly liabilities do not exceed 1/3rd of your proven monthly net income. It is possible with some banks to extend this ratio to 45% of net income and each bank in Spain will underwrite in a slightly different manner. In general Spanish banks will not take into account any projected rental income from your Spanish property when assessing your application. There are no specific "buy to let" products currently available.

STANDARD DOCUMENTS REQUESTED FROM NON-RESIDENTS FOR SPANISH MORTGAGES

EMPLOYED APPLICANT:

3 months payslips

P60-Form

3 months bank statements

Employers’ reference

Copy of Passport

SELF EMPLOYED:

Self assessment tax return

Accountants’ reference

3 months bank statements

Copy of Passport

STANDARD DOCUMENTS REQUESTED FROM RESIDENTS

EMPLOYED APPLICANT:

Contract of employment, stamped by the social security (Seguridad Social)

Résumé of the professional life (Vida Laboral)

Annual income tax declaration (La Renta)

3 months payslips (Nómina)

Bank reference

SELF EMPLOYED:

Certificate of the “autónomo” status or constitution deed of SL Company (Escritura de Constitución) Gestor reference

1 to 2 years Profit and Loss accounts

Annual income tax declaration (La Renta)

Last 3 quarterly IVA returns

3 months bank statements