Mortgages for your Spanish Finca
What types of mortgages are there in Spain?
Almost all mortgages are capital repayment and some include an interest only term normally between 2 – 10 years which then reverts back to capital repayment for the balance of the mortgage term.
Fixed rates do exist but the interest rates are expensive. However, the Spanish mortgage market is constantly improving and the range of mortgage options has grown over the last couple of years with a few lenders offering now interest only for the full term.
Non-resident mortgages
Spanish mortgages for non-residents are normally limited to loans of 70% of the bank valuation or purchase price. However, there are a small number of banks that are prepared to lend up to 80% of the bank valuation to a non-resident.
Terms up to 40 years provided the maximum age does not exceed 80.
Resident mortgages
Spanish mortgages for residents are generally at more favourable terms and conditions than those for non-residents, with the exception of second homes purchase.
Spanish residents benefit from lower interest rates, lower charges and higher loans to valuation. It is therefore very important to establish whether you qualify as resident or non-resident for that particular lender as early as possible.
Terms up to 40 years provided the maximum age does not exceed 80.
How much can I borrow?
Lending in Spain is based on the valuation of the property, your residency status, the purpose of buying as well as your income. For urban properties 70% - 80% can be achieved although for 'rustic' property only 50% is available.
The amount of mortgage is also based upon your income/debt ratio being between 35%-40% of nett income. So from your net income/s all uk mortgages loans and credit card payments, together with the new Spanish mortgage, repayment must not exceed the income /debt ratio. A few lenders will now offer higher income multiples.
How long does it take?
It can take anything from 2 to 6 weeks to arrange a Spanish mortgage so 4 weeks is a good indicator. Remember to allow for this extra time after you have decided on a property and paid the reservation deposit. A month on average is needed to receive your income documents and to instruct and obtain the valuation.
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