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It always has been, and will continue to be, a relatively simple operation to obtain a mortgage on a Spanish property. Whereas at one time mortgages were very much limited to being offered by the major Spanish banks the opening up and development of the European Union has meant that a large number of UK financial institutions, including the recognized high street banks, are now offering mortgage deals in Spain. In addition the range of mortgage products on offer has increased dramatically over the past two years and whereas interest only mortgages were once as rare as hens teeth they are now commonplace in the market. For anybody looking for a mortgage the search can be endless and the offers can be very tempting. No more so than the advertisements for 100% mortgages on Spanish property. This, however is not strictly true and should be viewed with caution. The Bank of Spain directives are that for non-residents the maximum amount of mortgage available is 80% of the valuation. For Spanish residents the opportunity does present itself for 100% funding of the purchase subject to terms and conditions.
One possible way for a non-resident to obtain an amount any where close to the full purchase price is dependant upon the banks valuation against which they will be happy to lend. This does genuinely happen as one of our recent clients found much to their surprise and benefit. They were paying 175,000 euros for a property with a mortgage from one of the leading Spanish banks. The bank carried out a full and proper valuation of the property and returned a valuation of 198,000 euros. Not only did it increase their borrowing potential it also confirmed what a sound investment they had made. A second option would be to secure the maximum mortgage available in Spain combined with an equity release package in the UK. As we are involved in the property business we are constantly offered new products from recognized sources. We are also made aware of the more dubious side of the business including the more questionable mortgage deals which include highly inflated valuations in order to obtain 100% funding.
By reputation the Spanish authorities are not considered to be the most efficient animals ever to walk the earth. However this is not strictly true and in recent times they have displayed the ruthless determination and investigative skills which would grace any episode of Inspector Morse. We therefore advise our clients to take care and tread carefully. We have contacts with a variety of reputable lenders and we source the best deal for the client on an individual basis. The types of mortgage products available are listed below. - Repayment mortgages, capital and interest, for up to 80% of the valuation. - Repayment mortgages which incorporate an interest only period if required. - Fixed and variable rates available. - Full term interest only mortgages -Limited term interest only mortgages -Any purpose equity release mortgages for up to 75% of the value of your Spanish property. - Self certified mortgages To name just a few.
What is required?
As with any mortgage application the clients will be required to provide certain economic information with regards to income and expenditure. The information differs according to the employment status of the applicant(s) i.e Employed/Self employed.
An employed person will be required to show proof of income in the form of recent wage slips, last P.60 and a current bank account statement to show economic movement.
A self-employed applicant will need to provide a full tax return for the relevant, preceeding year, a Chartered Accountants report for the last two years and a current bank account statement.
For new businesses with limited history we have, previously, provided the bank with a income forecast from an accountant and this has been accepted.
Retired persons are not exempt from applying for a mortgage providing they have the necessary proof of income to support the application. Regular income from pensions whether it be a state pension, private pension or an armed forces pension, will be considered for the application.
Summary.
It would not be possible to cover every eventuality and every set of personal circumstanses with regards to mortgages on this page without either sending the reader to sleep or causing the world wide web to go in to meltdown. Every case is dealt with personally and individually.
Basically why buy a new suit off the peg if you can have one tailor- made at no extra cost?
Spanish Residents.
The rules applicable to Spanish residents do differ and mortgages of 100% and in some cases 120% are available. Naturally terms and conditions apply and employment status is important to the application.
Full details would be available upon request.
