 It is surprising when you consider the number of Spanish properties which are purchased by foreigners in a year that it is only recently that Spanish banks
have begun to offer mortgage advisory services to these people and this, coupled with the lending conditions the banks impose, result in many foreigners
raising the finances in their own country instead.
The traditional maximum amount of money, which residents can borrow against a non-commercial property, is set at 80% of the purchase price or the value
which is placed upon it by the bank appointed surveyor (which the mortgage applicant must pay for), whichever is the lower. This maximum limit is reduced to
70% for non-residents. If you are prepared to shop around the many mortgage lenders that exist nowadays, then you will find that there are some around who
will lend more than this traditional maximum.
In a similar way to most European countries, there are two types of mortgage product that are the most popular. These are Fixed Interest and Variable
Interest which are normally quoted as being x% above EURIBOR (Euro Interbank Offered Rate).
The banks surveyor (the ‘Tasador’) will estimate the value of the property based merely on its location, size of build and plot and its general condition.
It should be remembered that this is a valuation survey and not the thorough investigation a property surveyor would carry out checking for any defects.
Before any mortgage can be processed, the lender will check that the property is clear of debts or existing mortgages with the Land Register.
The mortgage deeds, once supplied, will have to be signed at the Notary – normally at the same time as signing for the property – for which there will be a
fee charged which is set by law as a percentage of the loan value. Once signed, the deeds have to be registered at the Land Registry, again for a percentage
of the loan value.
The whole administration process of the mortgage application is under the control of a ‘Gestor’, appointed by the mortgage lender, who will also ensure
the required taxes are paid on your behalf, for a fee of course – normally around €150. A bank will normally require that you place on deposit an amount of
money to cover all of the fees above, with any left over funds being returned when the process is complete.
It is normal in Spain for any mortgage lender to insist that there is sufficient buildings insurance in place for the mortgage to be completed, whilst
some may even require life insurance as well.
On top of all the fees and charges previously mentioned, the mortgage lender usually charges around 1% of the loan value as a set-up fee and a further 1%
if it is paid off early (an early closure fee).
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