The Spanish property market is in much better shape than it was a few years ago, and Brexit has only slightly dampened its popularity with people looking for sun, sea, sangria and so much more.
Spain has always been a popular spot with Brits in particular as it has so much to offer. The types of people who are looking at mortgage products are those of retirement age who want to live in Spain full-time and others who are younger, but want to move to the continent in search of a new way of life. Then there are the people who want to keep their UK property but buy a second property in Spain for their own use for holidays and also for rental purposes when they are not staying in it.
Mortgage availability for foreigners and ex-pats
A wide range of Spanish mortgages are available aimed at both foreigners and ex-pats who are looking to invest in Spanish property, and these range from variable rate to fixed rate mortgages. Interest only loans are not normally available.
LTV & Rates
The maximum loan to value is 70% and lending terms/interest rates etc will depend on a client’s overall personal financial profile and Spanish property valuation. If higher deposits are made available, the Spanish mortgage products that banks offer may be more competitive.
Purchasing Land
It is difficult to secure a mortgage from the banks purely to purchase land. If the Spanish mortgage is required to build your own home, these types of loans are very restrictive and normally only available to experienced builders, where the land/property has obtained full planning permission and building licences. The minimum loan is likely to be higher and maximum loan to value greatly reduced.
Exchange Rates
Exchange rates have taken a nosedive in recent times, meaning you are likely to get less for your money. However, using an expert money transfer company such as Moneycorp can help soften the blow – check out their website for further info.
Expert Advice is Essential
With Spanish mortgages, terms and conditions can appear to vary for people with the same types of financial status. In depth knowledge and experience count – and this is where using a reputable mortgage broker to buy a property in Spain comes in handy as they will have the right contacts, built up over the years, and should know all the best and most up-to-date mortgage products on offer from Spanish banks that would be suitable for your own personal circumstances and requirements.
Mortgage Application Process
Collating all the supporting financial documents you need for your mortgage application in advance will help speed up the process when buying a property in Spain. These typically include proof of employment and income, information relating to any existing mortgages, details of any outstanding debts and, if you have found a property, any pre-agreement contracts.
When calculating how much you can borrow, Spanish lenders do not tend to take into account any rental income received.
Before taking out a mortgage in Spain it is obligatory to obtain a Spanish tax identification number called NIE, which is similar to our National Insurance number.
Once you have found a property you want to buy, a reservation agreement is usually made, which takes the property off the market for 10-14 days in return for a fee. If the contract is signed within the reservation period then the fee is deducted from the agreed purchase price.
In any initial sales contract you are signing, it would be wise to insert the words “subject to mortgage finance”. Check the appropriate wording with the lawyer helping you with your Spanish purchase.
Seek Legal Advice
Before the contract is signed it is important that your independent lawyer has checked everything is okay with the property, such as the correct planning permissions etc. Once the contract is signed, legal ownership is then transferred in the office of the Notario, a public official appointed to perform certain legal duties in the district who prepares the conveyance document.
Visas
If you have a minimum of €500,000 to invest in a Spanish property you will qualify for a property visa, also known as a golden visa. It enables you to live in Spain but also travel around the EU. You can invest in one property or a few, including commercial, or it can be for the purchase of land.
Before you can apply for a golden visa you will need to find a Spanish property, sign the pre-agreement and have the funds in place. You then have six months to complete the property purchase and the visa lasts for a year. It can be renewed annually providing you still own the property.
Taxes
In addition to the property purchase price and mortgage costs, buyers have to meet the cost of Spanish taxes including transfer tax, which can be up to 10% of the purchase price, depending on where the property is situated. For example, transfer tax in the Basque Country is 4%, while in Cataluña it is between 10% and 11%, depending on value. There is also a stamp tax which can go up to 2%, subject to the location and price of the purchase.
Other Costs
Once the Spanish mortgage is secured, you may also need to pay for an appraisal of the property.
How long does it take to get a mortgage in Spain?
The application process to get a mortgage for Spanish property can be quite lengthy because of the time it takes to collate all the supporting documentation, take up any references, arrange the valuation and the legal process. Ideally allow for at least two to three months, although it could be quicker if any of the above are received and carried out quicker, plus it will also be dependent on Spain’s local and national holidays.
Where is popular to buy property in Spain?
Popular places to currently purchase in Spain include Madrid, Barcelona, Valencia, Costa Blana, Costa del Sol and the Balearics & Canaries.
How much could you borrow?
Take a look at our Spanish mortgage calculator here to see how much you might be able to borrow. Then complete our Overseas Mortgage Enquiry Form for an indication if you may possibly be able to get a mortgage for a property in Spain, how much you may be eligible to borrow and at what rates.
