There are 2 different categorizations of property in Spain:-

          Urban which basically means the property is in a fully developed area and contains such things as plumbed in water, mains electric etc

          Rustic which basically means the property is situated in a rural area and often will not be equipped with such things as plumbed in water, mains electric etc

Spanish banks lending percentages differ depending on whether the property to be mortgaged is rustic or urban. In general, it is possible to fund up to 80% of either the purchase price or  valuation (whichever is lower) on urban properties. This percentage will drop slightly if the person applying for the mortgage is not a fiscal resident of Spain. With regards to rustic properties, 60% of either purchase price or valuation (whichever is lower) is the maximum a Spanish bank will lend. This percentage is not effected by whether the applicant(s) of the mortgage are fiscal residents of Spain or not but is largely dictated by the standard of the property and the quality of the properties legal documentation.

In the current economic climate, mortgage products in Spain are changing by the month. Most of the banks that still remain in the lending market are trying to cater to a specific demographic rather than having a set of generic mortgage products. Some mortgage products offer a 40 year term, some will take the client up to the age of 80, some offer extensive terms of interest only, fixed rates etc. Whilst each of these variables sound appealing when viewing mortgage products from the perspective of trying to keep the monthly payment down to a minimum, unfortunately there isn’t one particular mortgage product that offers the best of everything.

It is for these reasons that Premier Mortgages deal with more than 25 lenders of mortgage products in Spain and we are constantly updating the list of mortgage products that we have access to. By employing the services of Premier Mortgages you are giving yourself as a prospective buyer of Spanish property the best chance of getting the mortgage that best suites your financial situation.

Costs.

We normally reckon on the costs associated with your house purchase coming to about 10% but when a mortgage is involved there will be extra costs (valuation, arrangement, land registry and notary fees for a start) so you need to allow 12%. More importantly these costs will have to be paid from your capital. So, for example, if you buy a house for 100,000 Euros and have a valuation for this amount you can aim at a 70% mortgage. This leaves you with 30,000 Euros to find to complete the purchase price plus 12,000 Euros costs so the minimum capital needed would be 42,000 Euros.

A more likely however would be a valuation of about 75,000. Based on a 100,000 Euro purchase price the mortgage would be 52,500 leaving a shortfall to complete of  47,500 + 12,000 costs = 59,500

3. Actual Case Study.

Budget GBP 47,000 (70,500 Euros @ 1.50. 68,620 @ 1.46) + mortgage.

Property Price                                       115,000

70% Mortgage 115,000 x 70% =              80,500

30% Balance                                          34,500

12% costs                                             13,800

Capital Needed                                       48,500

Valuation at 75%                                    86,250

70% mortgage 86,250 x 70% =                60,375

Balance needed to buy                           54,625

12% Costs                                            13,800

Capital Needed                                      68,425

4. Advice

If you want to talk to a local brokerage I strongly recommend you to contact my good friend Chris at chris@pm-sl.com. 

Mortgage Enquiry

Our recommedation is Premier Mortgages.  You can contact them on the details listed below.