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Mortgage in Spain: How to apply?

Most of the Spanish banks provide mortgages to foreigners who buy a property in Spain, complications can happen. So it's indispensable to understand your options to avoid any unpleasant surprises.

What is the ideal customer for a bank?

  • Clients with a good professional profile
  • Good credit report
  • Affordability or debt to income under 35%
  • Good resale value of the property
  • OECD countries

Steps of the application process of Spanish Mortgage

- Documents requested

  • Your Passport/ID for all the applicants
  • Your NIE or Foreign Resident's Tax Number
  • Last 3 paychecks with a contract of employment
  • Proof of incomes
  • A view on your assets and debts
  • If it's a new building: Deed for the new building
  • The private sale-purchase contract
  • If you have a mortgage, land registry information on the property and the mortgage
  • If pensioners: Official proof of annual income

If the bank gets formal pre-approval from its risk department, then they send the mortgage offer.

When the bank gets the client confirmation accepting the offer then they open the account and send account details.

The client must send appraisal provision.

The bank orders the valuation and gets the approval of the mortgage. Then they send the official mortgage offer.

The bank arranges completion with the client or legal representative in Spain.

How much will you be lent as a non-resident?

A Mortgage should not be more than 80% of the value of the property. However, Spanish residents are often able to borrow up to 100%, for non-residents this figure often falls to 60%, because if you fail to make payments the bank only guarantee is the property.

What rate should you take for your mortgage?

Most of the banks provide a wide range of mortgages: variable, mixed and fixed-rated. As a non-resident property buyer, you will pay higher interest rates than if you had residency. The typical option is a fixed-rate mortgage at around 2,5% for 20 years. With a variable rate mortgage, between 1,1% and 1,25% is added to the Euribor index. Spanish banks prefer to give fixed-rate mortgages to non-residents because the amount the buyer repays remains steady.

In this way, it compensates for any future risk and uncertainty. The maximum repayment period for non-residents is usually 20 years, which can be extended to up to 40 years.

Best Mortgages rates you can get in Spain (Update June 2018)

- Current for financing housing

  • Average mortgage has an interest rate of 2.62%
  • Average mortgage rate decreased by 16.5% vs 1 year ago
  • The lowest rate ever was 2.62% in March 2018
  • Mortgage duration is 22 years
  • 62.3% have variable interest rates
  • 37.7% have fixed interest rates
  • The average rate for variable rate mortgages is 2.42%
  • The average rate for fixed-rate mortgages is 3.15%
  • The average amount issued per mortgage stands at €123,256, an increased of 9.1% vs last year.
  • 28.724 mortgages were issues + 34.2% vs last year.

Credits: propertyguides.com, howtobuyinspain.com

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