Property Purchase
At one time this would have been the most common reason for a Spanish mortgage. However, given the recent economic climate, it has moved aside and taken second place to remortgages and equity release.
During the boom times of the Spanish property market it was often possible to get a mortgage based on the Loan-To-Value, however these days most banks will only lend according to the Loan-To-Cost. What this means is that lenders will take the purchase price over and above a valuation figure.
The average maximum LTC or LTV in Spain is currently low (around 70%), however it is possible to purchase property´s that have a higher loan compared to the purchase price of the property. These are possible on properties the banks themselves are selling. Many banks have repossesed properties on their books and will loan at a higher ratio.
Remortgage and Equity Release
Many Spanish property owners are looking to refinance their portoflio, either to release capital or obtain a better interest rate. It has often been the case that mortgage lenders in Spain, do NOT decrease their mortgage interest rates in line with the fall in the Euribor. However, many poperty owners have succesfully sought legal advice, and the lenders have reduced their interest rate to a more 'fair' level, given the Euribor rates.
Equity Release and LifeTime mortgages used to be a very common and a useful product for property owners in Spain who where in retirement, or just wanted to release capital. They allowed the owner to either remortgage at a higher borrowing level, or pass the property to the bank in exchange for a cash lump sum and the opportunity to stay in the property for the rest of their lives. Unfortunately these products are becoming less and less common as banks tighten lending requirements, and prefer shorter term mortgage debt, as opposed to lifetime mortgages (where there could be no return for the bank for decades).
Property Fees in Spain
On average, the cost of buying a property in Spain will be in the region of 10 to 15% of the purchase price depending on the complexity of the procedure and the area of Spain in which you are buying.
1. The Notary fees are established by law and depend on the mortgage value
2. The Registry Fee/Land registry is usually 0.25% of the value of the mortgage
3. The Property Tax is 7% of the declared purchase price
4. The cost of the Property valuation depends on the value of the house usually it is
from 0.80 to 1.5%
5. Spanish lenders will charge you an Opening Fee of between 1 and 2%
6. Stamp Duty (AJD) is paid to the government and is calculated as a percentage of a
Spanish mortgage (between 0.85% and 1.75%).
Mortgage Application Documentation
Employed Applicants
3 month's payslips
P60
3 month's bank statements
Employer's reference
Copy of Passport
Self Employed
Self assessment tax return
Accountant’s reference
3 months bank statements
Copy of passport
Resident Document Requirements
Employed
Contract of employment stamped by social security
Vida Laboral
La Renta
3 month's nominas
Bank reference
Self Employed
Certificate of Autonomo or Escritura for SL
Gestor reference
1 to 2 years Profit and Loss accounts
La Renta
Last 3 quarterly IVA returns
3 months bank statements
