Buying in Spain

Mortgage products

Location:                     Mainland Spain, Canaries & Balearics.

Type of Loan:              Repayment or interest-only for purchase, remortgage or capital raise.

Purchaser:                  Individuals or companies.

Minimum loan:            €100,000.

Maximum loan:           None, but must not exceed 80% of the mortgage valuation or purchase

                                   price (whichever is lower).  

Term:                          5 to 30 years up to age 70.

Currency:                    Euro, Sterling and other major currencies

Fees

Spanish bank fees vary but are typically around 1% of the mortgage amount. You should also allow around €500 for the mortgage valuation; stamp duty of 1.8% of the mortgage amount; and notary and registration fees of around 0.5% of the amount borrowed.

Lending criteria


There are two main criteria for determining how much you can borrow: the value of the property and your financial situation.

Most Spanish lenders take into account your existing liabilities, including mortgage/rent payments, personal and bank loans, and maintenance payments. When these are added to your proposed Spanish mortgage payments, the total must not exceed 35% (this percentage can vary) of your net monthly income.

Proof of income is required by the lender. This can comprise earned income, pension, investment or rental income. However, not all lenders take all of these into account when determining how much you can borrow.

Savills Private Finance (SPF) has exclusive arrangements with a number of Spanish lenders, offering minimal and bespoke underwriting terms and conditions.

Insurance


Buildings insurance is compulsory and often sold by the lender. Most Spanish lenders don't require you to take out life or critical illness cover but SPF can provide independent advice for all your insurance needs.

Valuation


Loans are available up to 80% of the mortgage valuation: this limit is set by the Bank of Spain so normally it isn't possible to borrow more.

Spanish banks lend only on the basis of a mortgage valuation: this is not the same as a market valuation and is carried out as prescribed by Spanish law. The recorded transaction values of at least six similar properties sold in the area in the preceding six months are taken, with the valuer deriving an average price per square metre from these. This figure is then multiplied by the size of the property you are purchasing to arrive at your valuation.

The nota simple, an abbreviated form of the escritura de compraventa - the official document recording the transfer of ownership from the vendor to you - is provided by your legal representative or the land registry. This document may be required before a valuation can be carried out.


Legal issues


Remember: don't sign anything until you have taken legal advice and don't put down a deposit before ensuring that it is refundable. You should also check what legal costs and government taxes you are liable for before committing yourself to a purchase or remortgage.
SPF endeavours to secure the loan on your Spanish property within your preferred timescale but delays may occur owing to the Spanish legal and banking system.

Completion


In order to complete you and the seller need to sign the escritura de compraventa in front of the notary and ownership of the property passes to you. A power of attorney may be used to sign on your behalf.

Applying for a mortgage


It is advisable to arrange a mortgage in principle before committing to a purchase. This will enable you to find out how much you can borrow, so you don't waste time looking at properties beyond your budget. Even if you haven't found a property that you want to buy our international divison can help you to establish your affordability and issue an approval in principle based on your current financial situation.

If you have already found a property to purchase, we will send you a full mortgage application pack via email or in the post. If the property is still under construction, we can keep your file open until you tell us it is ready (the application can't be fully processed until the construction is completed).

Should you require funds to put towards a deposit, or if you don't qualify for a Spanish mortgage, we may be able to help raise finance for your proposed property.

Enquire now          Mortgage Calculator