Spanish Mortgages
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Spanish Mortgages

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Spanish Mortgages

Mortgages in Spain for non tax resident buyers are available up to 70% loan to value.

For non EU tax residents the maximum loan to value may be restricted to 60%.

Spanish Banks work on debt to income ratios using net incomes as declared on personal tax returns or the total income of applicants living non taxpaying jurisdiction as long as these can be justified by other formal documentation like Bank statements and employment contracts. The Banks in Spain will want to see that that the percentage of net incomes being used for monthly debt payments does not exceed around 35%, although each individual Bank will have a slightly different way of assessing and a slightly different maximum ratio.

Confirmation of incomes and liabilities is required to be seen on formal documentation which will include tax returns for those residing in tax paying countries, bank statements and personal credit files where these are available. For self employed applicants business data such as accounts and company tax returns may also be required.

Most Spanish mortgages are variable trackers which are linked to the 12 month Eurobor. It is also normal for Spanish banks to charge a first year premium rate which reverts to the variable in year 2. After the first year the Banks charges a margin which remains static for the lifetime of the loan and review the rate yearly against the published 12 month Eurobor at the annual review.

In Spain fixed rates are not a standard offering but most Banks will have a limited offering. Fixed rate offers cannot be secured at application the rate offered will be that available at full offer and higher redemption penalties apply.

Early redemption penalties are restricted by law in Spain and for variable products cannot exceed 0.50% in the first 5 years and 0.25% thereafter; this is for full and partial overpayments. For fixed rates early repayment levels can be up to 4.5%.

Repayment loans are the only mortgages available in Spain, there is no interest only facilities.

General terms of mortgages are up to 25 years but a few Banks will offer up to 30 years with Spanish Banks having age restrictions of up to age 75 years as a maximum.

Spanish mortgages will come with compulsory products attached, as a minimum this is a Bank account held with the Bank that grants the mortgage and buildings insurance but in most instances life cover contracted with the bank will also be required and the rate offered will be linked to the contracting of these products and written into the mortgage deed.

Costs of completing on a mortgage in Spain will include valuation fee, bank arrangement fees, notary and land registry fees and mortgage deed tax called AJD. Apart from the Bank fee, which can vary from Bank to Bank, all other costs associated with a loan are not related to the Bank specifically but form part of the securitization costs applicable to all lending. All costs except valuation fee are taken at completion.

To ensure you know what your comfortable budget would be, to give confidence when making an offer, and because when buying in Spain it is normal for some monies are passed before completion it is usually good advice to put in place, before committing to buying an approval in principle to the borrowings required.

Mortgage advice is best gained from an experienced and professional independent company who speak your language to ensure you have access to the best possible options available to you, a clear and concise view of the costs and a detailed understanding of the Spanish mortgage market.

For professional unbiased advice, budget analysis and a no cost and no obligation full financial approval service you can contact International Mortgage Solutions SL.

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