Mortgage Advisor Q&A

What is the maximum amount that I can borrow to obtain a mortgage in Spain? R. Oddy, Lancashire, May 2007 The maximum amount you can borrow on a mortgage will be determined by various factors but primarily by your annual income and the valuation or purchase price of the property.

What paperwork will I need to obtain approval for a mortgage in Spain? B. Cummings, Staffs, May 2007 You will need to provide a copy of your passport(s) together with:-

1. Employed persons
   Latest P60 together with last 3 months pay slips Last 3 months personal bank statements Employers reference letter, stating current annual salary, length of service and position.
   
   
2. Self-employed
   Last full tax return together with 2 years certified accounting information Last 3 months personal bank statements

The lending bank may also ask for a credit report in addition to the above or will undertake a credit report themselves with the authority of the client.

I am looking to get an interest-only mortgage in Spain. Are these types of mortgages available in Spain? C. McKeown, Dublin, May 2007 Although still not widely available, there are a number of Spanish banks that will look at interest-only lending subject to their usual lending criteria, and up to the standard 80% loan to valuation for non-residents.

What are the interest rates in Spain, compared to those in other countries? C. Murphy, Ireland, May 2007 Most interest rates in Spain are linked to the Annual Euribor which is currently indicated at 4.37% (June 2007) but is regularly adjusted and ultimately influences the rates at which lending is agreed.

Should I get a Spanish mortgage for my property in Spain, or use equity in my UK property to fund the difference? S. Kinneard, Somerset, May 2007 Because the interest rates are slightly lower in Spain than in the UK there may still be benefits in raising a mortgage in Spain to assist in the purchase of the property, particularly if there is limited equity available against the UK asset. Many purchasers choose to combine both options to cover the cost of the property.

Are there any costs associated with getting a Spanish mortgage? S. Duffy, West Yorkshire, May 2007 There are a number of costs associated with getting a Spanish mortgage. Namely

1. Bank opening fees - usually between 1% - 2% of the mortgage amount
2. Notary and registration fees - based on the loan amount.
3. Administration charges - usually between €300 - €500
4. Mortgage Tax - usually between 1.5% - 1.8%
5. Brokers fees - usually either a flat fee or up to 1% of the mortgage amount depending upon the broker used

How reliable are the Spanish banks? Do they provide a good service? D. Johnston, Northern Ireland, June 2007 The Spanish banks compare very favourably with the UK High Street banks, offering a full range of banking services. Increasingly, these services are in English with most offices having an English speaking member of staff available for enquiries. In addition, most of the leading Spanish banks now have sophisticated websites that allow for secure internet banking, providing online access to account information with the ability to transfer funds.

My solicitor has told me that I won't be able to get a fixed rate mortgage in Spain. Why not? D. Johnston, Northern Ireland, June 2007 There is the possibility to obtain a fixed rate mortgage in Spain and the banks are generally willing to provide these, but only upon request

Can I obtain a 100% mortgage in Spain? C. Van den Berg, London, June 2007 A 100% mortgage in Spain is not usually available to the non-resident market as most banks will look for some contribution to the purchase of Spanish property from the clients. However, each case is assessed on an individual basis with all factors including incomes and valuations taken into consideration. As a rule, you should only expect to finance between 70% to 80% of the purchase price with the shortfall to be found from your own resources. Many clients take advantage of the equity in their own homes or alternative property assets to raise the funds to cover this additional amount, effectively raising finance from more than one source to cover the entire purchase price.

What are the benefits of an interest only mortgage? G. Mora, via email, June 2007 With an interest only mortgage in Spain, the owner benefits from reduced monthly repayments for the interest-only period which can assist with initial budgeting, particularly if the client has to furnish the property and is ultimately looking at future rental income which may take time to establish.

Is there an age limit for a mortgage applicant in Spain? C. Temple, Herts, June 2007 There is usually an upper age limit between 75/80 years of age for mortgage applicants in Spain, by which time the bank would expect the borrowing to be fully repaid. In the case of joint applications where both parties are working, the bank may exceptionally use the younger age to extend the borrowing if necessary

Can I get a buy-to-let mortgage in Spain? S. Wood, South Yorkshire, June 2007 Buy to let mortgages are currently not available in Spain although the banks are constantly reviewing their range of products and it may be that this type of product becomes available in the future.

What is a developer's mortgage? S. Wood, South Yorkshire, June 2007 A developer's mortgage in Spain is a method of borrowing usually found on new developments whereby the mortgage already exists against the property and the purchaser is given the opportunity to take over the borrowing with the existing lender. If the loan is sufficient for the client it is generally cheaper to transfer the borrowing into the purchaser's name as certain costs can be avoided as opposed to arranging a separate mortgage. It will still, however, be subject to full financial information.

Is it now possible to get a self certified mortgage in Spain? J. Scott, via email, September 2007 Yes it is possible to get a self certified mortgage here in Spain for a non-resident. There are currently 4 banks offering self certified mortgages, the highest loan to value is capped at 65% currently (from one of the lenders). Because of their nature the set-up fees and interest rates are generally higher than a full-status product. All 4 banks will undertake or request a full credit report on application. Depending on what product you take, the mortgage can be either interest only or capital repayment (or a mixture of the 2).