Mortgage products
Location: Mainland Spain, Canaries & Balearics.
Type of Loan: Repayment or interest-only for purchase, remortgage
or capital raise.
Purchaser: Individuals or companies.
Minimum loan: €100,000.
Maximum loan: None, but must not exceed 80% of the mortgage valuation
or purchase price (whichever is lower).
Term: 5 to 30 years up to age 70.
Currency: Euro, Sterling and other major currencies.
Interest rates: See rate guide.
Fees: Spanish bank fees vary but are typically around 1% of the mortgage
amount. You should also allow around €500 for the mortgage valuation;
stamp duty of 1.8% of the mortgage amount; and notary and registration
fees of around 0.5% of the amount borrowed.
Lending criteria
There are two main criteria for determining how much you can borrow:
the value of the property and your financial situation.
Most Spanish lenders take into account your existing liabilities,
including mortgage/rent payments, personal and bank loans, and maintenance
payments. When these are added to your proposed Spanish mortgage payments,
the total must not exceed 35% (this percentage can vary) of your net
monthly income.
Proof of income is required by the lender. This can comprise earned
income, pension, investment or rental income. However, not all lenders
take all of these into account when determining how much you can borrow.
Savills Private Finance (SPF) has exclusive arrangements with a number
of Spanish lenders, offering minimal and bespoke underwriting terms
and conditions.
Insurance
Buildings insurance is compulsory and often sold by the lender. Most
Spanish lenders don’t require you to take out life or critical
illness cover but SPF can provide independent advice for all your
insurance needs.
Valuation
Loans are available up to 80% of the mortgage valuation: this limit
is set by the Bank of Spain so normally it isn’t possible to
borrow more.
Spanish banks lend only on the basis of a mortgage valuation: this
is not the same as a market valuation and is carried out as prescribed
by Spanish law. The recorded transaction values of at least six similar
properties sold in the area in the preceding six months are taken,
with the valuer deriving an average price per square metre from these.
This figure is then multiplied by the size of the property you are
purchasing to arrive at your valuation.
The nota simple, an abbreviated form of the escritura de compraventa
– the official document recording the transfer of ownership
from the vendor to you - is provided by your legal representative
or the land registry. This document may be required before a valuation
can be carried out.
Legal issues
Remember: don’t sign anything until you have taken legal advice
and don’t put down a deposit before ensuring that it is refundable.
You should also check what legal costs and government taxes you are
liable for before committing yourself to a purchase or remortgage.
SPF endeavours to secure the loan on your Spanish property within
your preferred timescale but delays may occur owing to the Spanish
legal and banking system.
Completion
In order to complete you and the seller need to sign the escritura
de compraventa in front of the notary and ownership of the property
passes to you. A power of attorney may be used to sign on your behalf.
Applying for a mortgage
It is advisable to arrange a mortgage in principle before committing
to a purchase. This will enable you to find out how much you can borrow,
so you don’t waste time looking at properties beyond your budget.
Even if you haven't found a property that you want to buy our international
divison can help you to establish your affordability and issue an
approval in principle based on your current financial situation.
If you have already found a property to purchase, we will send you
a full mortgage application pack via email or in the post. If the
property is still under construction, we can keep your file open until
you tell us it is ready (the application can’t be fully processed
until the construction is completed).
Should you require funds to put towards a deposit, or if you don’t
qualify for a Spanish mortgage, we may be able to help raise finance
for your proposed property.
Contact SPF on 020 7877 4710 or email international@spf.co.uk
CHANGES IN THE EXCHANGE RATE MAY INCREASE THE STERLING EQUIVALENT
OF YOUR DEBT
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SAVILLS PLC - INTERNATIONAL DEPARTMENT
SPF is part of the Savills Group, the international property consultancy formed in 1855. The Savills plc International team is
based in London and is dedicated to providing a service to meet an individual's overseas property needs.
For more information about Savills plc - International click here.
