How can you get a Spanish mortgage? We asked Bozena Brunowska of leading Spanish mortgage provider Mortgages Direct SL to answer all your mortgage queries…
Are you still working during the lockdown?
Not much has changed really as we always worked online. Banks, underwriters etc are working, and we’re getting approvals and valuations done. So it’s a little slower, but not much change. If you’re buying you might want to start a bit earlier, get a mortgage broker, NIE, solicitor etc earlier.
Have prices changed during the current crisis?
Properties haven’t changed in price yet. There will be opportunities for individual bargains from motivated sellers, but overall price is driven by demand. Many buyers last year were waiting to see what happened with Brexit and when it happened in January they wanted to finalise mortgages. But then they were unable to come out. They are waiting and ready. So we don’t expect a big drop.
How do I apply for a mortgage in Spain?
It’s very similar to the UK. The bank asks you to send in all your documents and it normally takes around two weeks for a decision, although it could be a little more in current situation. When we have pre-approval the bank instructs a valuation on the property, if you have found one. The report usually takes a week and then we are ready to move to completion.
What documents will you require?
You will need the following:
- Passport and proof of your address.
- For employed people, the banks need financial proof: P60, pay slips, bank statement, demonstrating your salary has been paid in.
- For the self-employed they will be looking for bank statements, self-assessment.
- If you own a limited company then your annual company accounts, self-assessment, bank statements showing income for you AND Your business.
- If you have a portfolio of property we would need the proof of net rental income and the tenancy agreements.
- We also need to give the bank proof that you have cash for the deposit and the costs of buying in Spain.
- Lastly, a credit report, showing borrowings and existing financial commitments.
What’s the maximum age by the end of the mortgage?
Most banks allow the mortgage term to run to 75. Some to 80.
Have interest rates fallen in line with base rates?
No not yet, and because existing clients might have financial difficulties and are requesting payment holidays so banks have extra commitments. Hence some are discussing raising interest rates, if anything, although that won’t be by much
Can we get a UK mortgage on Spanish property?
Currently it is not possible. It hasn’t been since the financial crisis of 2008.
If buying off-plan, do we need a mortgage approved first if paying over 2 years?
As a mortgage expert I would definitely recommend that you do! How we do it is we get the mortgage pre-approved, then three months before the property completion we resubmit the application with just updated documents, bank statements, pay slips etc. It only takes about a week.
What sort of loan-to-value (LTV) can we get?
For residents and tax payers in Spain the maximum is 75% and for non-residents it’s 70%. For some banks if the income is not in euros the maximum is 65%.
Can we remortgage in the UK to buy in Spain
If you have enough equity in your UK house, of course you can do that and buy cash in Spain. For cash buyers though, once you buy in cash in Spain you cannot refinance in 10 years’ time, that is not possible.
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