Untitled Document
Banks in Spain and Offshore lenders provide
mortgages for non-residents of Spain using the Spanish property
as security
Loan to Values
Standard loan to values are 70% for non-resident mortgages in Spain
and are always linked to the valuation of the property in Spain not
the purchase price. It is possible to obtain 80% loan to value but
access is limited, you will pay a higher interest rate and may be
expected to pay a one off premium for a Mortgage Indemnity Guarantee
(MIG), by the provider of the finance in Spain.
Most Spanish mortgages whilst linked to a percentage of valuation
cannot exceed the price declared on the Escritura (title deeds).
Spanish mortgage
product ranges
Finance in Spain is predominately linked to a variable rate and on a
repayment basis. 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 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. Fixed rate mortgages
in Spain are available up to 15 years.
Equity release
and Re-mortgaging in Spain
Because of the legal process of securing a loan in Spain it is more difficult
and costly to make any changes to your Spanish mortgage post completion.
Raising funds against an unencumbered Spanish property, releasing further
funds, or changing the terms is controlled by the Bank of Spain and further
tax; bank, and notary costs will apply. 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. Lender and product
hopping, which is now standard practice in the UK, is not currently feasible
in Spain.
Term
Spanish mortgage terms range from 5 to 30 years and are dependant on
age and Spanish finance provider selected. Most Spanish banks will
look for the mortgage to be completed by age 70 but it is possible
to obtain a mortgage in Spain up to age 85 as long as you are under
65 at the time of application.
Costs
All banks in Spain charge an arrangement fee for dealing with your mortgage
in Spain. Spanish bank opening fees are not payable up front and do
not apply if you decide not to take up their offer of lending. All
other costs in relation to the Spanish mortgage deed including mortgage
tax and registry costs and some of the purchase deed costs are deducted
from your gross mortgage advance, it is not possible to add your costs
to the Spanish mortgage unless your valuation level allows you to.
It is important to check you have accurately assessed and accounted
for all expenses to ensure you are not left short of funds for completion
day. We would suggest you allow at least 12% of the purchase price
to cover your purchase and finance costs in Spain in full and that
you make sure you are made fully aware of the provision of costs for
completion.
Currency
If you take a Spanish mortgage with a mainland Spanish bank the capital
provided and repayments 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.
Underwriting criteria's
Most mortgages in Spain are only granted on a full status basis. Through
IMS you can obtain a legitimate self-certified mortgage up to 50% of
the valuation of the property. It is unwise to allow yourself to be
talked into submitting false documentation and you should avoid brokers
who offer this service. A fraudulent application could put your Spanish
property and your deposits at risk if found to be so at a later date.
Most Spanish banks will assess your income net of tax and will want
to see that the combined existing UK 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 in to account any projected rental income
from your Spanish property when assessing your application. There are
no specific "buy to let" products currently available.
Benefits of raising
finance in Spain
Low interest rates, and protection of your assets in the UK are some
of the key benefits of borrowing in Spain, all alternatives should however
be understood and considered before making a final decision.
Standard non resident
document requirements for Spanish mortgages
Employed Applicants
- 3 months payslips
- P60
- 3 months bank statements
- Employers reference
- Copy of Passport
Self employed
- Self assessment tax return
- Accountants reference
- 3 months bank statements
- Copy of passport
Resident document
requirements
Employed
- Contract of employment stamped by social security
- Vida Laboral
- La Renta
- 3 months nomina's
- Bank reference
Self employed
- Certificate of Autonomo or Escritura for SL
- Gestor reference
- 1 to 2 years P & L
- La Renta
- Last 3 quarterly IVA returns
- 3 months bank statements
Some banks in Spain providing Spanish
finance may require you to supply your credit file from
the UK or may check your credit file direct. Any loans subsequently
granted will not be registered on your credit file in the UK.
UK: +44(0) 1438 360291
Costa del Sol: +34 952 815 681 Costa Blanca: +34 966 491 577
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