Mortgages in Spain…
If you are coming to Spain to look at properties and are thinking about a mortgage, we suggest that you get approval first, it costs nothing and normally an offer can be made within 24 hours.
With the increase in property availability and the Spanish government pushing the banks to release more funds there are very low rates available for non-residents, at below 2% fixed for the term of the mortgage with terms upto the age of 75 and 70% LTV,. Even with Brexit there’s only been a small decline in mortgage applications
There is a lot of confusion on mortgages on new build properties and the way that the system works, so I will be producing a simple FAQ document – but at Medland we work with a number of banks and independent brokers to ensure that you get the best deal. To get a mortgage quotation click here
Spanish mortgages are granted on affordability. The banks look at the specific income and expenses for the client and a ratio of typically 30% disposable income. Pension income is allowed but not all of monies received from buy to let properties. Although the amount loaned is up to 70% they do not fund the buying fees, approx. 15%, so you need a minimum of 55% deposit. Recently Spain scrapped the stamp duty on mortgages reducing the buying fees. Interest only mortgages are not available in Spain
Is it possible to get a mortgage on a off plan property? The good news is that yes it is but the mortgage company will make an offer in principle, based on your financial status. This will be renewed every 6 months until the property is ready and can be valued. Buyers will typically make staged payments up to 40%, during the construction phase
In Spain there is no such thing as a buy to let mortgage or any penalty for investors wishing to rent their properties for income.
In addition to the very low rates there is no penalty for early settlement. Lump sums paid reduce the capital amount. Most recently three of my purchasers, who plan to relocate to Spain, have taken mortgages as they have UK assets to sell in the future, and as they can afford the mortgage payments they can decide later when to sell the UK assets.
So to summarise the main benefits of a buying with a Spanish mortgage are:
- No stamp duty
- Available for off plan property
- No penalties for rental properties
- Low interest rates
- No penalty for early settlement
- Fund your purchase
- Sell UK assets when ready
If you have any further questions feel free to contact us at any time.
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