SpanishMortgagesCanIGetAMortgageInSpain?

AstheUKhousingmarketisstillinarelativedownturnand Spanishpropertypriceshavefallensignificantly,many individualsareconsideringapplyingforamortgageona Spanishproperty.So,letusbrieflyexaminesomeofthe mostcommonissuesencounteredwhenseekinga mortgageinSpain. DifferingLTVValuesforaSpanishMortgage ThetopLTV(loantovalue)ratethatanonresidentcan acquireis80%,althoughthismaybedifficulttoencounter andmostbanksoffer70%.Thissignifiesthataborrower mayneedtomakeuptoa30%depositonthetotalcostof theproperty.Additionally,Spanishbanksusean affordabilityratioofbetween30and40percent.In essence,thismeansthatbankswillnotallowamortgagewherethemonthlypaymentsexceedapproximately35%of onesmonthlyincome. WhatDocumentationisRequiredtoObtainaSpanishMortgage? Toinitiateamortgageprocedure,thefollowingdocumentswillbeinitiallyrequired: Thelast3monthsofpayslipsoranequivalentsourceofverifiableincome. Thelast3monthsofbankstatementsrecordingsuchincome. ThemostrecentP60/taxreturn Avalidcopyoftheapplicantspassport WhatistheCurrentVariableInterestRateandWhatistheEuriborinterestRate? ThecurrentvariableinterestrateonaSpanishpropertymortgageisapproximately4.7%whiletheEuriborinterestratefor atwelvemonthperiodcurrentlystandsat.543%.Bothofthesefiguresareimportantincalculatingtheoveralllongterm costofamortgagerepayment. WhatisaNotaSimple? ANotaSimpleisadocumentprovidedbytheSpanishPropertyRegistrythatincludesadetaileddescriptionaboutthe property.Itincludesthecurrentownersinformation,whetheranydebtsexist,thepropertyboundariesandhowtheland isclassified(commercial,farmlandordevelopable). WhatDifferentTypesofMortgagesareAvailableinSpain? AstheSpanishpropertymarketisnotassophisticatedastheUKmarket,thelargeportionofmortgagesgrantedare variableinterestrate(simplycapitalandinterestrepayment)mortgages.Thecreditcrunchhaseffectivelyeliminated interestonlyorfixedrateplans. WhatisaBasicBreakdownoftheCostsInvolved? Theinitialcosttosecureanewmortgageis4.7%oftheentireloanamount(remembertheinterestratenotedabove). Additionally,thereisavaluationfeeof300euros.Bankstendtochargea1%setupfeeandtheSpanishgovernment willfurtherchargeanadditional1%stampduty.Mortgagebrokerscharge1%(althoughsomemaybewillingtoworkfor less)andoneneedsalsotoconsideronanindividualbasisthelegalfeesandnotarycostsinvolved,asthesecanvary significantly.Onanaveragethetotalcostswillaccruetoapproximately11%ofthepurchaseprice. CanIGetaMortgageinSpainandHowDoesitComparetoaResidentsMortgage?

 AforeignerapplyingforamortgagemustfirstobtainanNIE,orforeignidentificationnumber.Thiscanbeobtainedby contactingtheSpanishconsulateinLondon.Themaindifferencebetweenaresidentsmortgageandaforeigners mortgageisthefactthattheforeignerwillbeliableforSpanishtaxesaswellasanyexistingUKtaxes.Particularly,there isataxwhichSpanishauthoritieslevyonforeignpropertyownersthatvaluatesaproperty,takes2%ofthatfigureand thenimposesataxof25%ontheinitial2%.Thisisforforeignersonly.MoreonSpanishpropertytaxesforresidentsand nonresidentscanbeseenathttp://www.spanishpropertyinsight.com/taxandpensions/propertytaxesfornonresidents/ CanIgetanInternationalMortgagewithaBankintheUK? ManylargebanksoffertheUKresidenttheadvantageofapplyingforamortgageforaninternationalproperty.Whilelarge bankssuchasBarclaysandLloydsTSBoffertheservice,itisadvisabletoutiliseSpanishbanksduetothefavourable exchangerate. ShouldIUseaMortgageBrokerinSpain? ASpanishmortgagebrokerwillbeinnatelyfamiliarwiththerelevantlawsandregulations,butalwayschecktomake certaintheyhavetherightqualifications.Also,aSpanishlawyer,orabogado,isalsoadvised,assomeofthemortgage brokerspracticesorpoliciesmayseemunfamiliartoaUKresident. UptoWhatAgeCanMortgageRepaymentsbeMade? Repaymentscanbemadeupto70yearsofage,althoughduetothefinancialcrisis,someregionsarenowextendingthe ageuntil75.Itisbesttocheckwiththemortgagebrokertomakecertaintheagelimit. TheseareafewofthemainquestionsoneshouldconsiderwhenapplyingforamortgageinSpain.Aswithayfinancial decision,itisbesttoseektheadviceofaqualifiedprofessionaltoaddressanyadditionalconcerns. ImagecourtesyofDevelopmentsWorldwide