Spanish banks provide mortgages to residents and non-residents alike. Terms and conditions in both cases are similar. Residents who are looking at properties for sale in Marbella – or elsewhere in Spain – to use as their main home will generally be able to borrow up to 80% of the home value. Non-residents wanting to buy a villa or apartment on the Costa del Sol can expect (depending on credit worthiness) to borrow up to 70% of the bank-assessed value.
We highly recommend to our customers to get your mortgage PRE-approved prior to your visit to the Costa del Sol to purchase the property. Having your mortgage pre-approved with the bank helps you to plan your finances accordingly and gives you more negotiation power once you have found your dream home.
The following documentation is required to start a mortgage application process:
National Identity Document
Proof of income
a) In case you are salaried worker
2 last salary slips
2 last year income statements (P60)
Letter from the company. ( the letter from the company must indicate the type of your contract, seniority, annual salary and position of the employee.
b) In case you are self-employed worker
Accountant’s letter ( it must indicate the name of the company, sector in which it operates and registry details, confirmation of turnover and corporate profits of the last 2 years together with the salary, dividends and bonuses self-employed worker received)
Income statement for the past two years
`Annual accounts for the last two years
Proof of other source of income
Bank statements for the past 6 months
Every bank has its own policies and procedures when it comes to obtaining the mortgage in Spain, but these documents will be required to start the application process. After considering these documents your bank may request additional information from the applicant. (typically this is a good sign).
So, what types of mortgages are available?
The majority of mortgages offered by Spanish lenders are variable rate repayment mortgages. This means a proportion of your monthly payment is used to repay the capital loaned, with the rest accounted for by interest payments. Interest is normally calculated by using the Euribor rate (European inter-bank offered rate) plus a percentage — for example Euribor + 2%. Rates vary according to lender, so it is worth your while to shop around. Fixed rate mortgages are also available, with interest rates set at a slightly higher level than current variable rates.
FAQs about obtaining mortgage on the Costa del Sol:
1. How long does it take to get a mortgage in Spain, from first contact to having the funds available, assuming I’ve already found a property to buy?
Typically around 4 to 6 weeks. Sometimes it may take longer if the holiday month of August falls in between, or if you have a complicated profile.
2. What is the debt-to-income ratio (interest payments as a % of net disposable income)?
Interest & capital payments should not exceed 30% of net disposable income.
3. If I already own a mortgage-free property in Spain, can I get an equity-release mortgage on it?
4. Can I get a fixed-rate mortgage in Spain?
5. Should I appoint a lawyer?
We strongly recommend that you appoint a lawyer. They will ensure that all the necessary checks are carried out on the property. If anything goes wrong, a lawyer’s job is to protect your interests.
Should you have any questions about obtaining a mortgage on the Costa del Sol, please get in touch with us. Alpha Estates Marbella team has many years of experience and is happy to advise you on the correct steps to take and contacts.
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Disclaimer: This blog is intended for information only and should not be viewed as a definitive guide. Legal procedures and costs may change.