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Easy! Mortgages in Spain are done under the same familiar pattern that you are used to, and even in Spain, the methods for getting one rarely change from bank to bank.
The key obviously is to identify a bank where you can obtain not only the amount you need for your purchase, but also to get a good interest rate too. We have associated ourselves with the most economical and the most service oriented banks in the area; and more importantly, with the best rates!
Since banks vary significantly and have different client strategies, the interest rate given will depend mainly on what type of bank you borrow from - and of course this is dependent on the general interest rate across the board. However, banks that are caja de Ahorros ("savings bank") are where you will be able to get the best rate for your loan. Knowing this, there are some key points to bear in mind when considering a mortgage in Spain:
Mortgage Timeframes (duration of mortgage)
Typically mortgages in Spain have a maximum time span of 15 - 17 years. However, some banks are now offering longer terms and one specially offers up to 30 Years which includes an Interest Only period.
Processing Timelines (how quickly can you get one)
Mortgages are based on a large amount of paperwork, which luckily your lender (the bank) will handle for you. Of course, this is built into their lending fees and typically they process your application (from start to finish) in about 4-6 weeks "turn-around" time. The recent influx of more banks, particularly on an international banking level has introduced a level of competition which has speeded up this process significantly.
The "Valuation" of what you want to buy (what the bank thinks the property you want is worth)
The most important part of the aforementioned paperwork is essentially the formal bank valuation. This is the price tag the Bank put on the property you want and is typically 15-30% less than the sale price. In some cases it has been known that a valuation is actually more than the sales price, but this is rare. If you need a mortgage, the good news is that we can mediate as well as coordinate this process on your behalf and have the bank do a valuation for you. While bank mortgages are very easy to obtain, the final figure for any valuation you are given is arrived at by factoring in how old the property is, where it is located, how large it is and any special features it has. This is then cross-referenced with an area market index which ultimately gives you the final figure to work from (the valuation).
What amount you will be loaned
Probably the most important consideration for a mortgage in Spain is that the banks will only loan you up to 70% of the valuation (therefore the loan is not against the sale price - and it is very important to consider this!) Residents (or future residents, particularly with some form of income or occupation) in some cases can borrow more.
Important notes to remember
Please remember that in Spain you typically need at least 30% deposit as well as additional 10% for fees. Last but not least, if the valuation and therefore loan amount you need is marginally close, "but not quite enough when compared to your budget"; banks in Spain under current market conditions will do everything they can do to make the deal possible - or at least the banks we deal with do. In other words, they will loan you the difference as long as that difference is not a "massive" amount.
A Typical Mortgage Example
If you are considering the purchase of a brand new apartment, and the apartment costs 175,000 Euros, and the bank produces a valuation for the same property of 139,000 Euros, the bank will loan you: 97,300. The difference should be the amount you bring into the sale.
(If you would like a custom estimate with figures that are more applicable to your personal circumstances (such as purchase of a villa or commercial premises for example); you can either calculate this online by clicking here for our personal mortgage calculator, or we can prepare a custom cost study for you to use as a guideline - no problem at all!)
Costs associated with obtaining a mortgage, plus amortization issues you should know about:
(Another example) When the client asks for a mortgage he incurs the following costs:
1. Valuation of the property - 350€
2. Let us say, for example, the client wants a mortgage for 48,080€
3. Mortgage Arrangement Fee:
The bank will charge you 2% of the mortgage amount to arrange the mortgage for you. Thus 48,080 € would cost you 962€ in an arrangement fee to the bank.
4. Your Escritura (title deed) to buy the property with the bank - 601€
5. Additionally, your Escritura to buy the property from the other company
is another 601€
6. Land Registration - 301€
7. Notario (notary public) Fees for the Escrituria (title deed) - 301€
8. Taxes (IVA): For this you will have to take 7% times the declared value; i.e. if you are buying a place for 51,086€ your IVA is 3,576,02€. The bank will have to have this money in their possession to process the mortgage.
9. The Plus Valia (Capital Gains Tax) needs to be figured out but can be estimated at roughly 900€ for an apartment and 600€ for a house as a City Tax to the local Town Hall.
The good news is that we can mediate this process for you by using banks that we have dealt with for over 35 years. Further, because of their competitive nature, banks have flocked into our area offering the best rates and new services, including bilingual capabilities.
Here are three banks that we work with that have traditionally given the best rates and service to us in the past :
Our number one choice on the mortgage front since it has very competitive rates and friendly staff, all of them bilingual. An advantage is that Global Currency Exchange Network is linked with this bank so reducing charges to transfer funds even further.
Cruce de la Playa - Rambla le Campos 363
04638 Mojacar, Almeria, Spain
Tel: +34 950 475 836 & +34 950 475 026
Fax: +34 950 475 440
Swift Code: CECAESMMO43
Director: Alfonso A Baena Fernandez - email@example.com
Asst. Director: Manuel Fernandez Cobo - firstname.lastname@example.org
Offers a wide range of services from mortgages to international banking. Also linked to major wire transfer services mentioned above.
Calle Mayor, 85
04630 Garrucha, Almeria, Spain
Tel: +34 950 460 043 & +34 950 460 064
Fax: +34 950 460 043
Director: Francisco Javier Hervas Lopez - email@example.com
This is a brand new Solbank branch that derives itself from the roots of Natwest and the merger with Banco Sabadel. Solbank offers a multi-lingual service in all areas ranging from current accounts to translations, as well as security deposit boxes.
Avenida del Mediterraneo, 363
Playa del Mojacar, 04638, Almeria, Spain
Director: Carlos Navarro Vazquez - NavarroC@solbank.com
We hope that this document clears up the picture on how mortgages work in Spain, as well as showing how easy they are to obtain in this excellent time to buy.
Rates are still very low!
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