Spanish Mortgages

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Spanish Mortgages

Spanish Mortgages: traditionally Spanish banks have always been considered more risk averse than their European equivalents and therefore credit of any kind, including Spanish mortgages, has always been slightly harder to source in Spain than in, for example, the UK or Ireland.

To find about about Spanish mortgage rates click here.

In addition the choice and complexity of mortgage product has been considered somewhat limited in comparison to British banks.

In recent years however banks have responded to the increased demand from expat (as well as Spanish) clients for better and more accessible products. The basic types of mortgage product were expanded upon and the lending criteria in many cases were relaxed.

Unlike the UK, where the banks calculate the total amount someone can borrow as a multiple of their income, in Spain it is slightly different. The bank will instead look at the monthly repayments and what percentage of your monthly income they account for.

The total amount the bank will lend is calculated against the value of the property you wish to purchase. Typically Spanish mortgages upto around 70% of the value for a property are available. Mortgage brokers who are more familiar with Spanish institutions may be able to acheive slightly more favourable terms.

Credit Crunch in Spain

Recent events have seen banks worldwide tighten up their approvals process for lending. The credit crunch has similarly affected Spain and its banks have approved many fewer mortgages in recent months. The criteria have become stricter and refusals have become more common.

Documents required for a mortgage application

For employed individuals:

• Passport
• P60
• Last 3 months payslips
• Last 3 months bank statements
• Bank reference
• Employers reference
• Credit report

For self employed individuals:

• Passport
• Tax Return
• Profit & Loss accounts for return
• Balance sheet up to date
• Last 6 months personal & business bank statements
• Bank reference
• Accountants reference
• Credit report

Spanish Mortgage Costs

Its a good rule of thumb to allow for around 10% of the property price in costs and fees, so if you are looking at purchasing a 250,000 EUR apartment, you could expect your buying costs to be around 25,000 EUR give or take. This is mainly tax and legal fees. Read this more in depth guide to mortgage costs in Spain.

Other fees include:

• 1% - 1.5% Bank set-up fee
• 1% Stamp duty Valuation fee
• Notary & Land Registry fee

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