Buying a property with a Spanish mortgage
If you need a mortgage here in Spain, whether it’s for your first purchase or for a re-mortgage on an existing property, the process is pretty straightforward and is similar to that in the UK.
Eligibility and costs
You will have seen that some of the property descriptions on our website state that ‘it may be possible to apply for a mortgage on this property'. This means that, based on the information we have from the seller, it is likely that this property meets the lending criteria set by the banks. Whilst it used to be the case that a property had to have had a registered (at the land registry) title deed or escritura for 2 years or more but now some banks are relaxing this rule. On new build villas, as long as the land has the registered title deed and the house has the relevant building permission and approval (declaracion de obra nueva), the banks will consider a mortgage.
Before the bank can make any decision about your application, the property will have to be valued by the bank valuer (tasador), who will use a set ‘value per square metre' and not the market value or the price you are paying for the property. You will just need to be aware of this when you are calculating the level of mortgage you are going to need to enable you to buy. Sunset Properties always assists its clients through this process and accompanies the valuer when he goes to the property. We do our best to help things along and will keep you informed of progress at all times.
Spanish banks will generally lend 60% to 70% of the value of the property and will require the mortgage to be fully repaid by the age of 70, normally over a period of 5, 10 or 15 years. Requirements regarding eligibility for a mortgage are much the same here as in the UK in that the lender will need proof of income and regular outgoings and will look at these in relation to the loan you're applying for.
The cost of arranging a mortgage is likely to add about 2 - 3% to your overall buying costs. This could bring your total costs to around 12- 13% of the value of the house which is significantly more than in the UK so do bear this in mind.
It is worth noting that if the house you are buying already has a mortgage attached to it, then it is sometimes possible to transfer the existing mortgage from the seller to yourself. This might then reduce the set up costs for you.