A guide to Spanish mortgages

A range of banks offer mortgages to individuals and businesses seeking to purchase property in Spain to enjoy the benefits of overseas living. The rates available vary greatly and therefore, it’s a good idea to research the market thoroughly before completing a purchase. International mortgages can be obtained either from Spanish banks or larger UK banks, some of which have branches in the tourist regions of Spain. This article provides you with a guide to Spanish mortgages.

Preliminary steps

A specialist mortgage broker can advise on the best deals available to suit individual budgets and circumstances. In Spain, many brokers have English speaking advisers. Most lenders will not lend more than 70% of the value of the property to non-Spanish borrowers and therefore, require a deposit of at least 30%. Banks will require to see documentation including pay slips, bank statements and tax returns. If the applicant is self-employed, they will also wish to see copies of business accounts.

Types of mortgages

The European Central Bank The majority of Spanish mortgages are based on a variable rate, whereby the repayments vary according to the base rate set by the European Central Bank. Some lenders also offer fixed rate mortgages, where the interest rates tend to be higher, but the borrower has the peace of mind of knowing the amount of the repayments. A few banks also provide an interest-only mortgage to borrowers who only wish to pay the interest on the loan, and intend to repay the capital in full. Interest-only mortgages appeal to purchasers who plan to rent out their property.

Completing the mortgage

The "nota simple" Anyone buying a property in Spain should obtain a “nota simple informative” from the Property Registry to authenticate the boundaries of the property. The "nota simple" also confirms that the property is debt-free and that it does, in fact, belong to the seller. Sales contract The purchaser and seller then enter into a sales contract and the purchaser pays a percentage of the price to the seller. A copy of this contract must be provided to the lender. Before completing the mortgage, the lender will require the property to be surveyed by a qualified architect to confirm that it is structurally sound. Final completion of the sale must be certified by a notary.