If you are Non Resident of Spain most Spanish banks will be willing to lend you up to 70% of the valuation price. However, certain lenders will advance 80% and there are even specialist schemes offering up to 90%.If you are Resident in Spain the default maximum that some banks will lend you is80% of the valuation but, for First Time Buyers, 100% funding is available.
In all cases the bank will need proof that you have sufficient income to make the monthly repayments.
‘Self Certification’ mortgages, where no proof of income is required, are available to 65% for a purchase and 60% for a remortgage/refinance.
‘Interest only’ mortgages, an important protective product for Spain, are now
widely available with IO terms up to 30 years. The normal availability is between 5 and 15 years.
Loan terms can now be up to 40 years or age 80.
Q.What do we do to get the best loan possible?
A. You have 2 choices; shop around or use a specialist mortgage broker.
Be mindful though that the lending system in Spain, as with the process and
risks associated with purchasing a property here, are very different than the UK. Caution is warranted and, for that reason alone, be sure you are using an independent solicitor and independent Financial Advisor to cross check your actions.
Generally, costs are much of a muchness but bear in mind that ‘Interest only’
mortgages are very important for general financial planning and protection and it
is mainly the international banks that offer these.
- Start up commission: this will range from 0.5% to 2% of the loan.
- Reference rate: the banks use different reference rates. The most
transparent reference rate is the EURIBOR, which is published daily in all
thenewspapers and on the internet.
- Differential: This is the percentage that the bank charges on top
of the reference rate. If the reference rate is Euribor the differential
applied will be between 0.75% and 2%.
- Early repayment commission. This will range from 0% to 1%.
Regardless of which bank you or your broker select, you need to includethe following extraexpenses;
- Valuation fee. The bank will charge you for the valuation which
will be actioned by an independent company chosen by the bank. The charge will be a minimum 250 euros and up to 0.2% of the valuation
- Notary fee for the mortgage deed. Allow 0.5% of the loan as a maximum.
- Registrars fee for registration of the mortgage deed. Normally 250 euros.
- AJD mortgage tax. Allow 1.6% of the mortgage sum.
When canceling the mortgage, apart from the cancellation commission to the bank, you need to count on the following fees to complete the documentation:
- Notary fee for the cancellation deed. Normally circa 0.5% of the loan.
- Registrar’s fee. Allow 250 euros.
Be aware also that if you are buying a building under construction, the builderROSE FINANCIAL SERVICES
has sometimes already set up a construction take mortgage that you can choose to take cover.
whilst this will save you certain costs as above to the tune of 2%, the
mortgage will unlikely offer ‘Interest only’ which is a key product to
protect you in Spain.