Spanish Purchase Mortgages

Spanish mortgages for purchasing a property in Spain. Before buying in Spain, it is advisable to inform yourself on how the non resident mortgage market works. Also how they are regulated.

Buying real estate in Spain

The buying process in Spain is safer and more secure, if you have your finances in place. For a mortgage in Spain we provide fully underwritten approvals with no cost nor obligation.

• We will assess your maximum borrowing capacity, for a mortgage in Spain
• A pre approved Spanish mortgage helps you negotiate with sellers from a position of strength
• Fully underwritten approvals allow you to make an offer, with confidence 

Contact us today for further information on obtaining a pre-approval for a Mortgage in Spain

Why obtain independent information, when arranging a Mortgage in Spain

Many Spanish Banks do not have published criteria’s and products. Within guidelines Branch Mangers can define rates and costs for the Spanish Mortgages. Applying direct to a Bank direct you cannot be certain you are being offered the most cost effective terms and conditions. As an independent broker, we use our knowledge and experience to negotiate on your behalf. Ensuring you have access to the best possible Spanish mortgage terms and conditions.

• IMS provide free advice and guidance
• In addition, no obligation Spanish mortgage fiscal approvals
• We help you ascertain your maximum budget
• Also what cash deposits you will require

We ensure you are aware how much the purchase and Spanish mortgage process will cost. Therefore at completion there will be no nasty surprises or misunderstandings.

For independent and knowledgeable advice, contact us today

Regulation of 2019 impacted on timescales for Spanish Mortgages

Spanish Mortgage regulation was implemented in June 2019. Changes extended the time taken to organize a loan in Spain. Signing of the binding mortgage offer in Spain now happens a minimum of 10 days before completion. Therefore providing a cooling off period. In addition offer registration at a central notary office.

• Before commiting to a property its important to undertake the Spanish mortgage process
• Therefore before point of contract when non refundable deposits are payable
• Through the entire process we will guide and support you, making sure your deposit monies are protected
• Everything you need to know, is explained in a clear and concise manner

A regulated mortgage professional manages your Spanish mortgage application. Bank of Spain registration number D134.

For more information on Spanish mortgage applications Contact us today »

Non resident Spanish mortgages loan to values

Spanish Banks have loan to value restrictions, for a mortgage in Spain. Spanish mortgages are granted as a percentage of valuation or purchase price. However, the lower of the two.

• Non resident maximum loan to values are 70%
• One lender offers 75%
• Some lenders only offer 60% for non tax residents of Spain.
• Other restrictions may apply for applicants living outside the EU.
• Maximum loan to values for Rustica property might be lower
• Larger loans above 500k can have loan to value limitations

We specilaise in obtaining the maximum Mortgage in Spain for loans in excess of 500k.

Unike other countries, costs of purchase cannot be added to loan.

Need to understand more about loan to values. Ask us your question now.

Term of a mortgage in Spain

Most Spanish Banks offer a range of years. The affordability ratios the lender works to can affect the number of years offered.

• Maximum terms for Spanish Mortgages range from 20 to 30 years
• Age restrictions apply. Maximum age for a mortgage in Spain, varies from Bank to Bank. From age 60 to age 80 years
• Spanish Banks prefer non resident loans are a maximum of 20 years

To better understand what Mortgage in Spain is right for you, speak with one of our experienced advisers. Request a call back today.

Types of loans available in Spain

Spanish Banks offer a limited amount of product types, for mortgages in Spain. These include variable rate trackers. Fixed rates for the full term, and mixed rates. There is limited access for self builds and commercial lending. Standard repayment loans are the only product in Spain. Interest only has disappeared from the market. The withdrawal of interest only facilities was instigated by the Bank of Spain.

• Fixed rate loan Spanish mortgages are available. Now offered by most Banks in Spain. Fixed rates are increasingly, more widely available
• Access to a Spanish mortgage can be affected by the currency of your earnings. To find out more contact us
• Variable rates provide medium term flexibility
• Full term Fixed rate Mortgages in Spain are available at competitive rates
• Fixed rates provide long term stability
• Higher early redemption penalties apply to fixed rate loans.
• A couple of lenders offer mixed rate products. Shorter term fixes. Moving to variable at end of fixed rate term

Buy to let mortgages. Therefore using rental income as part of the affordability assessment, are not available. However the Banks in Spain do not prevent you from renting the property out

Most loans are for purchases only. However on a case by case basis some banks allow, or offer, remortgages or equity release.

Loans for self builds are available. Normally up to 70% of build costs. One lender considers up to 70% of the total project cost. So whilst the land must be owned outright, they will consider the costs of the land when assessing maximum loan.

Spanish loans for the purpose of buying land in Spain is not possible. Therefore land must always be purchased in cash.

Spanish Banks affordability ratios for a Spanish mortgage

Spanish Banks assess affordability differently to other countries. The main criteria is monthly affordability. However some lenders will also include total capital owed. Spanish Banks never work from gross incomes. At IMS we understand how each bank assesses an application. Therefore will save you time and money, by focusing on the right lenders for your circumstance.

• Spanish Banks work on affordability ratios based on net not gross income
• Incomes must appear on personal tax returns
• Generally Spanish Banks will not consider net company profits not personally drawn. In addition not all Banks will consider the full dividends taken by self employed
• Treatment of existing buy to let mortgages and rental incomes varies considerably from Bank to Bank. A few Spanish Banks will not lend to individuals with more than one investment property
• Calculation of the debt outgoing, versus rent received, can make it difficult for buy to let landlords to meet affordability ratios
• Most Banks will consider 100% of after tax net income but a few limit this to 80%
• Some lenders apply minimum earning levels

On average to comply with the general criteria for gaining a mortgage in Spain ,your monthly outgoings on loan and debt payments. Including the new loan, will need to be less than 35% of your net income.

In isolation asset wealth and investment income is not considered by the Banks in Spain.

However we specialise in helping financially complex applicants obtain the best possible Mortgage in Spain.

We are experts in helping Spanish Banks undertsand the actual overall quality of the applicant.

Complete our online form for your personal assessment of lending viability

Interest Rate levels for Spanish non resident mortgages

Spanish Banks generally adapt their rate offering to each client. Taking into account overall quality of the application. For instance affordability ratios, also maximum loan to value required. A well prepared application, submitted by an experienced broker, will ensure your application is viewed in the most positive manner.

• Variable rates are trackers based on a margin above the 12 month Euribor
• The margin above Euribor differs between Banks
• To gain the lowest rate, linked products may be required
• Spanish Banks often link compulsory products to the best rate offered. Therefore when looking at headline rates, all elements must be considered
• However lenders must also offer the option of a rate, without linked products

Variable rate loans are adjusted against the Euribor on the review date. This will normally be 6 or 12 monthly Check our best buy tables today

Fixed rates are fixed for the full term. Rates are offered based on the number of years the loan is taken over.

Early repayment penalties for a mortgage in Spain

By law implemented in June 2019 early repayment penalties cannot exceed 0.25% for the first 3 years. Or the option of 0.15% for 5 years. After this period the penalty is 0%. The rule applies for partial and full overpayment of variable rate products. Increased penalties apply for fixed rates.

• Penalties are a percentage of what you overpay. Not the original capital taken
• Fixed rates maximum redemption penalies are 2% for the first 10 years and 1.5% thereafter
• Spanish Banks have to make an interest rate loss for the higher penalty to apply
• Fixed rate penalties are a percentage of the rate loss, or capital overpaid. Whichever is the lower of the two

Lower early repayment penalties can be negotiated for partial overpayments. Not all lenders apply the maximum penalty. If you intend to make regular overpayments, it may be beneficial forgoing stability of a fixed rate, to gain more flexibilty.

Variable rates provide lower early redemption costs. We can help you decide what works best for your particular needs.

Costs of completing on a Spanish Mortgage

In 2019 the costs associated with a mortgage in Spain reduced significantly. Spanish lenders no longer pass on the cost of mortgage deed tax. Nor the costs of Notary and land registry, relating to loan deed.

• Spanish Banks charge a fee known as the Bank opening, or Bank arrangement fee. This fee is taken from the gross loan amount at completion
• Fees for Banks in Spain normally range from 1% to 2% of loan amount
• Other fees associated with a loan in Spain include, a valuation fee. Payable at instruction of valuation
• Valuation fees average 0.10% of value, with a minimum fee of around 300 euros

Broker fees for arrangement of a loan in Spain vary. Rather than charging a percentage of the loan amount we have a set fee. Therefore providing significan savings on larger loans.

Contact us today if you would like further information on buying and loan costs.

AHE Spanish Mortgage Guide »

Spanish Land classifications and other loan restrictions

Spain has two types of land classifications. Urbana and Rustica. Understanding the classification of land a property sits on is important. Land classification can affect lending available. Other loan restrictions apply for self builds, off plan purchases, and reforms.

• All Spanish Banks lend against residential property on Urbana land
• Not all Banks will lend on property registered as Rustica, or any other classification. If they do, it will normally be at lower loan to values
• It is advisable to check the Nota Simple of any potential property, early on in the application process, to understand the land status
• Only a few Spanish Banks offer construction loans. In addition loans for large reforms. Loan to value restrictions apply
• Self build mortgages rates are likely to be higher than average

Before committing yourself to a property, check with us the type of purchase, and how that might affect borrowings. Contact us today

Home buyer valuations for a Spanish Loan

Spanish lenders have a panel of Bank of Spain authorized evaluation companies. They prefer you use a company from their panel, but cannot insist you do so. A bank instructed valuation, due to volume of business, may be cheaper than you can achieve direct.

• Formal Valuations can only account for meters registered at Land Registry
• Unregistered overbuilds or extensions will not be taken into account. Therefore changes to the property, not updated at land registry, will not be valued for mortgage purposes
• Lenders like to use their appointed valuation company
• Under the 2019 legislation an independent valuation can be instructed. The valuation company must be registered by Bank of Spain. Also the report must be designated for the purpose of a mortgage
• Standard Bank valuations are like home buyer reports. However they are not a structural valuations
• Valuations instructed by a Spanish Bank, do not indemnify the buyer against future structural problems

Very few valuation companies offer structural valuations with full indemnity. If you require this service we can help organize one

Spanish Mortgage deeds

All Mortgage Loans in Spain are signed for at Notary, on a separate deed to the purchase deed. Both deeds will be in Spanish, therefore, the Notary will require a person fluent in Spanish attends. It is possible to appoint a lawyer to sign on your behalf under a specific POA

• In the absence of a consumer credit act, loans are written into a legally binding deed. This is signed by all parties at completion
• It is not possible to change the terms within the deed after signing. You are bound by the terms by law
• The Notary is obliged to ensure that the content of the deeds are understood before signing
• Mortgage deeds signed with a POA require specific wording, to allow for the whole transaction to be undertaken

Changes to the deed, beyond an agreed reduction in rate, movement to a fixed rate, or extension of term, require a new deed. In this instance some Mortgage costs apply

Novacions, so changes that can be made without a new deed, hold a maximum cost of 0.15% first 3 years, and no cost thereafter. For movement from variable to fixed rates there is no charge.

Subrogation of Mortgages in Spain

Subrogation of a loan in Spain means a buyer takes over the existing mortgage deed. You cannot port an existing mortgage to a new property. Loans in Spain are linked to the property not the individual.

In Spain you can take over, or subrogate an existing loan held against the property. However due to preferential terms on historic loans, many Banks have stopped offering this facility. Exploring if a suitable loan exists against the property you are buying, is possible.

• Firstly you need to understand the terms and conditions of the existing loan
• What capital is outstanding
• Would the current banks consider subrogation

The key benefit of subrogation was avoiding the payment of mortgage deed tax. With all Banks now picking up this cost, subrogation is less beneficial. However Subrogacion of a developers loan when buying off plan should always be investigated. This is because rates often reflect resident rather than non resident conditions.

Contact us today for more information on how Spanish Mortgages work »