Guide To Spanish Mortgages

Buying a property in Spain

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Guide To Spanish Mortgages

How much can I borrow?

Short answer: not as much as you once could! The same Spanish property crash that may have seduced you with bargain prices has also had the effect of reducing what banks can/will lend. Typically the maximum you can borrow is only 70% and if you're remortgaging it drops to only 60%!

What are the Rates?

Like the UK there is a wide variety of mortgages you can get so the rates vary, typically though they are from 3.5-5.5% depending on your circumstances. Contact us for a more precise quote unique to you.

Are there any income requirements?

Spanish banks also have affordability criteria based on income. Normally your total monthly debt repayments (including your UK mortgage and any other personal loans you have as well as the mortgage you are applying for) cannot exceed 35% of your net income, however there are some banks though that can stretch this to 40%.

What else do I need to know about Spanish mortgages?

The minimum you can borrow is €100,000, the normal term is 25 years (like in the UK) and maximum age restrictions are usually 75.

What is the legal process like?

If you're moving to Spain for the relaxed pace of life, get ready for it to start here! Time frames are notorious for slipping so be patient. This does however give you time to let the Sangria clear from your head and allow you make sure the purchase is what you really want to do. You'll be asked to commit to a Private Purchase Contract but do not do so until you are sure your finances are in place – of course, you can talk to us about your Spanish mortgage – and make sure you check your tax position with a UK tax adviser. We also recommend you use a lawyer independent from your Sales Agent. Again, we can offer a list here.

Any other advice?

Here is a checklist of questions to ask prospective lawyers in Spain before appointing one to work on your behalf:

  • Is the full square meterage of my purchase fully and legally registered?
  • Are building licences and first licences of occupancy in place?
  • Is the 10 year Building warranty in place (for properties under 10 years old
  • Is the land it sits in registered as "rustic" or "urbanized" and what are the possible implications of buying on rustic land?
  • Am I buying direct or is my purchase a "cessation of contact"? If so, what are the implications?
  • Will this purchase have any Under Declaration (minimum possible is better for you)
  • What are the costs including the Standard legal and tax costs (instruct them to follow Spanish law in relation to IBI, Plus Valia and any existing Spanish mortgage redemption charges as these should be paid by the Vendor, not you)
  • What Capital Gains, Inheritance and Wealth tax will I be liable for?
  • What deposit do I have to pay and when does it become non-refundable?
  • What will you charge me and what other disbursements will be payable?
  • Is your firm working solely on behalf on my behalf as the Buyer (In Spain a lawyer can work for both the Buyer and the Seller!)

Like all property purchases, you need to be organized and have good Advisers. We can help you with these issues and keep your Spanish dream from becoming a nightmare so do fill in the form and we'll be in touch.

Lastly, to get the best rates on your foreign exchange transactions we strongly recommend you open an account with HiFX. Quite simply, they will provide a far better exchange rate than your bank and they can do one off transactions or allow you to lock in a guaranteed FX rate on mortgage payments for up to one year in advance. To find out more and sign up, visit their website here

Overseas Mortgages are not regulated by the Financial Conduct Authority, nor are they protected by the Financial Ombudsman Service or Financial Services Compensation Scheme. They may not be covered by the home regulator of the country concerned either, so you should consider the risks carefully.

  • Maximum you can borrow is only 70% and if you're remortgaging it drops to only 60%
  • Rates vary, typically between 3.5-5.5% depending on your circumstances
  • Debt to Income Ratio (DTIR) cannot be above 35%
  • Minimum mortgage size is €100,000

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Frequently Asked Questions

What is the maximum LTV available?    

For non-residents the max LTV is usually 65%, maybe 70% in some rare cases.

What will it cost to arrange my mortgage?    

The fee to help prepare your mortgage varies from country to country but will be made clear to you in advance. It is usually 1-1.5% of the mortgage amount.

Will my UK credit record affect the success of my application?    

 Yes, it is a key factor in the eligibility criteria.

What is the min/max mortgage available?    

We only arrange mortgages of at least approx €100,000/$100,000. LTVs available vary from country to country but generally are n higher than about 70%

How important is my income?    

This is hugely important. Most overseas countries look at the Debt to Income ratio i.e. the percentage of your total net monthly income that is used to make debt repayments such as domestic mortgages, personal loans, car payments, credit cards AND the mortgage you are now applying for. Depending on the country you wish to buy in, this DTIR is generally between 30-40% so can be quite strict. In our experience this is the single biggest obstacle faced by UK buyers when looking to purchase overseas.

What is needed to apply

Applying for a Spanish Mortgage is very easy. Below are listed the things you need in order to apply.

  • Eligibility CriteriaClean credit and sufficient income to make repayments is required.
  • Documents RequiredInitially just an application form but in time you will be asked to prove income and ID
  • Additional CommentsThe entire process takes 6-8 weeks depending on the location you are buying in

There are many bargains to be had in Spain due to the continued over-supply of properties, particularly in the popular tourist areas on the coast. However, buying in Spain can be fraught with matters as seemingly straight forward as title on properties potentially presenting problems and the legal system works very differently. We seek to ensure your mortgage is correctly arranged. Get in touch to discuss.

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