Mortgages Guide & Requirements Spain 2022

Mortgages Spain

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Begin your search for a Spanish mortgage as soon as possible

If you're serious about purchasing a home in Spain and will need or want to use finance, you should start arranging your Spanish mortgage relatively immediately.

Putting off the financial aspects of your Spanish home purchase will do you no good.
If you wait too long and are forced to arrange your Spanish mortgage under duress, you will almost certainly wind up with an expensive and inflexible loan.
Remember that mortgage terms are typically long, so you may have to live with the implications of your decision for many years.

The following are some of the benefits of securing your Spanish mortgage before you start looking for a home:

  • It costs you nothing to get started as soon as possible.
  • Forward planning allows you to better understand the benefits and drawbacks of taking out a mortgage in Spain and to make the best decision possible about how much, if any, to borrow.
  • Arranging your Spanish mortgage ahead of time helps you to discover the finest mortgage in Spain for your needs and avoid spending too much.
  • You will have a better sense of how much you can spend on your Spanish home and can work out the potential future financial ramifications of your purchase if you take measures to arrange your Spanish mortgage early on.
  • With your Spanish mortgage in place, you'll be less likely to lose the Spanish property you've worked so hard to locate, and you'll have one less source of concern and strain when it comes to buying a home in Spain.
An overview of Spanish mortgages

Spain, like any other modern country, has a well-developed mortgage sector, with a plethora of lenders offering a dizzying array of Spanish mortgages.

Banks and savings banks (known as cajas in Spain) offer mortgages, which are marketed either directly by the lenders or through mortgage brokers.
Along with national banks and cajas, a number of multinational institutions provide mortgages in Spain.

And, as with any other established mortgage market, the pricing and conditions of the Spanish mortgages on offer vary greatly, ranging from rigid and expensive mortgages to less expensive and flexible mortgages.
Although the interest charged on all Spanish mortgages is based on the European Central Bank's base rate, mortgage lenders in Spain have a lot of leeway in terms of the charges and conditions they provide, however they are limited by the market.

 

In Spain, there are both variable and fixed rate mortgages.

The great majority of mortgages offered in Spain (to both Spaniards and foreigners) are variable rate mortgages, which means that repayments fluctuate based on the European Central Bank's base rate.
Borrowers with variable-rate Spanish mortgages have no way of knowing what their future mortgage payments will be.
They will pay less if the interest rate lowers, but they will pay more if it rises.

Most lenders also offer a fixed-rate Spanish mortgage, which has higher interest payments in the short term but, if interest rates increase, a fixed-rate Spanish mortgage holder will likely pay less than a variable-rate holder.
The main benefit of fixed-rate mortgages is the peace of mind they provide to borrowers, who know exactly what their mortgage repayments will be for a specific period of time.

Some lenders also provide a mixed mortgage, which includes a fixed rate for a set length of time (for example, 5 years) followed by a variable rate.
Interest-only mortgages are extremely difficult, if not impossible, to get by.

 

Conditions of a mortgage

Your mortgage will be determined by your financial situation.
Lenders will want to know how much money you make and what other financial obligations you have (your personal balance sheet).
As a general rule, they will lend based on earnings multiples, ensuring that your total loan repayments do not exceed 35 percent of your net yearly income.
They may be willing to lend you additional money if they believe you have outstanding professional prospects and that your income is likely to rise in the future (something you would have to convince them of).

They also take into account the kind of property you want to buy. If you are buying a holiday home they will consider this riskier than a main home. They will assume you will default on your holiday home loan first if you get into difficulty. So, generally speaking, loan to value ratios for holiday homes are lower and conditions are more expensive.

What kind of a loan to value can you expect in Spain?

Typically 60% to 70%, though during the boom it was possible to get more than 100% using inflated valuations.  But it all depends on your creditworthiness. How many years can you expect? It depends upon your age, but most mortgage terms in Spain run for 20 to 40 years. The longer the term, the smaller the monthly repayments, but the more the mortgage will cost you over the lifetime of the loan. P

Spanish mortgage costs explained

Mortgage valuation

A Spanish lender will require that the property be evaluated by one of their designated valuation agencies before obtaining a mortgage.
Depending on the value of the property, this might cost anything from a few hundred to over a thousand euros.
This fee must be paid by the individual applying for a Spanish mortgage.

Fee for Land Registration in Spain

Before granting a loan on a property, a Spanish mortgage lender will want a nota simple (land registry file) confirming that the property has no additional unforeseen debts tied to it.
However, for your own sake, you (or rather, your lawyer) will need to seek a nota simple from the land registration, thus this may be regarded a non-differential fee that you would face with or without a Spanish mortgage.

Fee for obtaining a mortgage in Spain

The majority of Spanish mortgage providers demand a predetermined cost to set up a loan.
This is normally 1% of the mortgage's value, although it can range from 0.5 percent to 2 percent.

Notary Fees for Mortgages

If a mortgage is secured against a Spanish property, it must be declared in front of a Notary.
The number of clauses in the deeds determines the notary fees, and a mortgage deed will have roughly the same number of clauses as a purchase deed.
A Spanish mortgage raises the Notary fees at the time of signing the public documents of sale since the notary will charge for this.

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It's all about you and your wishes. And we love to hear about it!
After completing the form we'll contact you to see how we can be at service for you.

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