Firstly, a mortgage is basically a signed contract between the borrower and the lender of a loan against the property to be purchased by the borrower and the Spanish mortgage is no different. If you wish to purchase a Spanish property, first arrange the mortgage before anything else as otherwise you may have to settle for more expensive and inflexible mortgages.
A Spanish mortgage is valid for many years so the consequences of a hasty decision will last much longer. The benefits of arranging for an early Spanish mortgage are many, the foremost being that it costs you nothing! Advanced planning can help you clarify the pros and cons of Spanish mortgages and you can choose the one which suits you the best.
A Spanish mortgage usually depends upon the valuation of the said property, your income, residency status and the purpose of buying the property. City properties may allow you for almost 70-80% loan whereas country properties may be less at only 50% loan. It may be possible to get up to 120% mortgage but this depends upon the valuation of the property. Mortgages in Spain are most of the time, capital repayment and a few may include an interest only clause. Interest rates are more expensive fro fixed rates. However, the Spanish mortgage market is evolving and a number of more mortgage options are now available.
The EURIBOR or the European Central Bank base rate is the Spanish interest rate and it changes every month. Some lenders may provide a better rate than the normal 4% available to non-residents but it is not the norm. But, Spanish interest rates are still more affordable than elsewhere. The mortgage can be repaid by monthly direct debit if you are earning in euros or a commercial exchange company can provide a fixed rate for monthly payments if not earning in euros.
For people employed by others, passport, pay slips, latest bank statements, employer’s references, credit report are all required as documents for securing a Spanish mortgage. For the self-employed, passport, tax returns, bank reference, bank statements are some of the essential documents needed for the mortgage. A multi-lingual Spanish lawyer will be of tremendous help in navigating you through the legal nitty-gritty of the mortgage and steer you in the right direction.
With all these points taken care of you can go ahead and dream about that lovely Spanish villa!
Steve Walden is a qualified team of mortgage consultants in Spain with lots of experience in Spanish mortgages. We arrange a Spain mortgage on property, land and developments.
