| Mortgages in Spain |
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Mortgages in Spain Spanish Mortgage Frequently Asked Questions (FAQ's) It is understandable that obtaining a mortgage in a foreign country is a daunting prospect and you are bound to have many questions about the process and how it works. Spanish property can be financed in many different ways: Releasing equity from your UK property. Releasing equity from your residential property in the UK is a usually avoided as it can be hard to find a lender and it may cost you more in the long run. Obtaining a Spanish Mortgage There are a handful of UK mortgage providers that will give you a mortgage on a property in Spain. The advantage of having a Spanish mortgage is that the rates are more competitive at around 3.25%. In order to make the process as easy as possible, below are some points for consideration that may be helpful. How can I get a mortgage in Spain? In order for you to be able to obtain a mortgage, you need to be able to provide proof of your income. You will also be required to open a Spanish bank account in order for you to pay the monthly mortgage instalments – this is very easy to set up and all that is required is that they have a copy of your passport and proof of address. How much can I borrow? Typically in Spain, as a non resident, you will be able to borrow up to 70% of the value of your chosen property. Spanish mortgage providers will offer mortgages of up to four times your annual income. You also need to be aware of other costs associated with buying a Spanish property when considering how much you want to spend, as this can be as much as 12% in addition to the purchase price. The costs are broken down as follows: 7% IVA (VAT), 2% Mortgage costs, 1.5% lawyers costs, 1.5% other – including notary and valuation fee – a bank will appoint a valuer for mortgage purposes, and they will require you to pay this fee up front which is usually around 500 Euros. There will be redemption fees for doing so, and these will be between 0.5 – 1.5% Can I have an interest only Spanish mortgage? Many Spanish mortgage lenders will give the option to have your mortgage on an interest only basis. However, unlike UK mortgage providers, this is only fixed for a period of time – typically the first two years, and then it will switch to a repayment mortgage. Do I need insurance on my property? Yes, it will be a condition of your mortgage that you take out insurance through an approved insurance company. What term can I repay my mortgage over? This depends on your age. You can have your mortgage between 5 and 30 years. |
