Jamie Mills

Who do you ask for advice when seeking a mortgage?

Buying a home in Spain is a very important financial decision - we realise that this can be stressful and sometimes confusing. After we have found your ideal property, we will introduce you to a mortgage advisor who will assist you with banks here in Spain and lenders in Gibraltar. We also have links with leading UK lenders who will assist clients wishing to release equity from their principal home to purchase a property in Spain.

Are mortgages available in Spain for UK residents ?

Yes, mortgages up to the value of 75% are available.

Where can I obtain a mortgage ?

Mortgages are available from most of the major banks in Spain, the UK and lenders in Gibraltar. Also, many new properties under construction on the Costa del Sol are already mortgaged by the developer as a means to raise capital to fund the construction. A purchaser, under the direction of a Spanish lawyer, can take over such a mortgage when purchasing the new construction. In this case the mortgage may be up to the value of 75%. In some cases resale properties are also offered for sale with a mortgage in place. Your lawyer should check out the terms and conditions applying to the mortgage, and advise you accordingly. Mortgages in Spain are attached to the property and written into the title deeds, so it is most important to use a Spanish lawyer who is familiar with this, as the mortgage is on the property and not the person who takes out the mortgage.

What is the cost of arranging a mortgage ?

Unless you are purchasing a property with a mortgage already in place, [see above] the cost to arrange a mortgage will be around 1% to 1.5% of the amount advanced.

How much can I borrow ?

As a general guide a non-resident will be able to borrow around 70% of the valuation of the property. Residents can borrow around 80% of the valuation.

hould I have a euro mortgage ?

If you borrow in a currency that does not have a fixed value against the euro e.g. sterling, currency fluctuation could make your borrowing more expensive or less expensive depending on the exchange rate at the time. We would advise you to borrow in the currency from which you derive most of your income.

What interest rate will I pay ?

Interest rates will again depend on the currency in which you choose to borrow. Interest rates for mortgages in euros are based on the Euro Interbank Offered Rate, (EURIBOR). The lenders rate will be a margin over Euribor, generally Euribor + 1.25%, but certain lenders may fluctuate on this. Fixed rate mortgages are available at slightly higher interest rates. For more information on EURIBOR, go to http://www.euribor.org.

How often are rates reviewed ?

Usually once a year.

What is the cost of early repayment of the mortgage?

From zero to 1% depending on the type of loan. Some lenders only charge for cancellation in the first five years, others make no charge at all. It is important to choose your lender carefully if you intend to repay your loan early.

What information will the lender require ?

Banks vary in the amount of information they require. As a general guide you can be expected to be asked for the following:

Last 3 wage/ salary slips.

Last Income Tax declaration/P60 in the UK, or evidence of latest annual tax declaration.

Copies of your current bank statements covering the last six months.

Reference letter from your employer confirming date of employment and proof of income (not always essential but helpful, especially if you want to achieve the maximum amount of borrowing).

Copy of passport/residencia.

If you are self employed:

Latest Income Tax declaration. .

Copies of the accounts for the last two or three years.

Chartered Accountants Company report, confirming your annual personal
drawings from the company.

Personal bank statements.

Bank reference letter.

Copy of passport/residencia.

What about bank charges ?

Bank charges for maintaining an account and commissions for transferring money, vary considerably from bank to bank. Some provide good online banking, which can be useful for transferring funds and paying bills in absentia.

Which lender should I choose ?

We offer a mortgage advisory service which is offered free of charge to our clients. Our ability to introduce you to the relevant bank with all the necessary paperwork completed will speed up the mortgage process to a successful conclusion.