Mortgages on Spanish Property

In contrast to a lot of myth it is not that difficult to arrange a mortgage on Spanish property . The criteria for obtaining a mortgage or loan on Spanish property is pretty much the same in the UK - if you have sufficient capital and monthly earnings then there are various options available depending on your needs and circumstances.

There are companies selling Spanish property mortgages on the Internet that offer the advantages of English speaking representatives. These generally provide a good service but beware - you will pay for it! We would recommend using a local Spanish bank as these days at least one member of most branches can speak English and with the advance of the internet translation of text is also not difficult.

On most rural Spanish property, such as property inland Costa Blanca , Spanish banks will lend up to 50% of the assessed value of the property and on urban properties up to 70% for non nationals. Interest rates on mortgages for Spanish property are currently between 3% and 4%, and 3.25% with the local banks if you want to buy property in Costa Almeria . One thing to be wary of is that a lot of banks will only lend over a 15 year term to non-residents buying Spanish property which makes the monthly repayments higher. However, this can be converted to a longer term such as 25 years if you become resident in Spain and are of a suitable age.

The first step is to open a Spanish bank account - being with a bank that is local to the Spanish property you are buying is advisable. Having a local branch is beneficial as they will know the local Spanish property market and be able to arrange the valuation. Also, if you plan to move into the Spanish property it will make communication and monthly payments easier.

The next step to mortgaging Spanish property is to order the valuation, which will normally cost between 250€ and 300€ depending on the size. Obviously for larger plots of land or commercial Spanish property the valuation will cost more. Once the bank has the assessor's report they will lend the percentage relevant to the location (either 50% or 70%) as long as you have proved to have sufficient monthly earnings to make the repayments. The proof of earnings is the same as in the UK - Last 6 month's bank statements and P60 (or last years annual accounts if you are self employed).

Taking out a mortgage on a Spanish property does have the advantage that the bank or mortgage lender will do there own checks as they will not invest in something that is financially risky. Giving you peace of mind!

The main other mortgage available on Spanish property is for those owning a plot and want a loan or mortgage to build. As long as 50% of the value of your plot is higher than the first stage payment required for the construction, then most banks will lend you the money. The equity in your Spanish property increases with each stage of build and the banks risk reduces against the amount they are lending. So as long as you have a plot of sufficient value and enough earnings to make the repayments getting a mortgage to build Spanish property is no problem. The bank can give you an interest only loan for a year whilst you build and then convert this to a standard repayment mortgage (or other mortgage) at the end of the year. Alternatively you could sell the Spanish property on or before it is built and never have to convert the loan to a mortgage!

If you do not have sufficient collateral in the plot of land you own there is the possibility of paying enough percentage of the construction costs for the bank to lend the rest.

Obviously there are a great number of mortgage possibilities on Spanish Property - too many to mention on one page. If you buy property in Costa Almeria then Fast Track Properties can arrange a mortgage suited to your needs.

(Written by Richard Hall, 25th May 2005, Mortgages on Spanish Property)