|
Spanish mortgages are a very affordable option, with interest rates consistently much
lower than in the UK.
Getting a mortgage in Spain is very similar to getting a mortgage in the UK in that
you must be able to prove that you have the income available to pay back the loan.
Advanta Homes has relationships with several leading Spanish banks including Bancaja,
Caja Madrid and BBVA and we can arrange all aspects of the mortgage on your behalf.
There are generally two levels of mortgage offered, one for residents and one for
non-residents. For non-residents the mortgage offered is generally around 70% of the value, for residents it is usually around 80% (or more) of the value of the property.
Proof of Income
You will need to provide proof of income in the form of three recent payslips and the
previous tax year´s statement of earnings and tax paid (in the UK this is the P60 document, or the Statement of Earnings for self-employed applicants).
It is sometimes also necessary to show that your outgoings allow for the mortgage
payments by supplying recent copies of bank statements showing typical income and expenditure.
Please contact us before sending this information to us so what we can confirm exact
requirements in each particular case.
Mortgage Application
Once you have proven your income, the bank can agree in principle to the loan, but
they must first approve the property you wish to purchase before agreeing formally to proceed.
Firstly the bank will conduct an independent valuation of the property and state an official “value” for what
they think the property is worth. This value may be lesser or greater than the purchase price you agree to pay, but it is this value that the bank will consider when setting up the loan.
Secondly the bank will inspect the papers associated with the property to ensure that everything is in
order. The bank will only lend on property that they regard as a good risk, and so they always check the title deeds and land registry documentation.
At this stage, the bank is ready to agree formally to lend the agreed amount to you for the specific property
you have chosen.
Types of Mortgages
Mortgages in the Eurozone are typically cheaper.than those in the UK due to the lower
interest rates in Europe. This can make a Spanish mortgage a very viable way to fund the purchase of your Spanish house - although the initial set up costs are high in comparison with the UK
mortgage market.
Just like in the UK there are many different types of mortgage on offer from many
different bank and savings companies, but there tend to be three basic types that non-residents tend to go for, these are:
Standard Repayment
- each month you pay the interest due and an amount from from the capital owing. Over the years of the loan, the amount of interest paid each month drops and the amount of capital repayment increases.
First Year Interest Only
- whilst interest only mortgages are rare in Spain, many people opt for an easy first year of only paying the interest portion of the loan, and then from the second year till the end of the loan, the mortgage operates just the same as the Standard Repayment mortgage above.
Part and Part
- this mortgage is very popular as it allows for a lower monthly payment.70% of the capital is paid back as in the Standard Repayment, but 30% of the loan is interest only leaving a lump sum to be paid at the end of the loan period (or before, with no penalty).
The table below illustrates typical monthly repayments (approximate) on a loan of
100,000 Euros over 20 years.
|
