The IFA-Bulletin Knowledgebase
IFA-Bulletin Knowledge Base
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This is a quick guide to financing a property purchase in Spain. With any financial transaction it is strongly recommended that all purchasers seek independant financial advise before proceeding with purchasing a property whether it is at home or abroad.
Financing Your Spanish Property
Non-Spanish residents
Depending on your age (most loans have to be repaid before reaching 75), you can expect a mortgage term of up to 30 years.
Mortgages granted are normally up to a maximum of 70% of the valuation price, however, 80% is possible with guarantees. And if you are buying off plan, this is based on the property value on completion, not while it's still being built.
On rustic properties, mortgages of up to 60% are available. Mortgages are based on being able to spend a percentage of your net income between 35% and 40% on your mortgage payments.
Spanish residents
(This means you hold a Residencia card and are paying both national insurance [Seguridad Social] and tax in Spain .)
Loans of up to 85% of property value (and with guarantees, 100%). Mortgages are based on a net income multiple of up to 50%.
On rustic properties, mortgages of up to 60% are available. Equity release of up to 50% in the event of outright ownership of a Spanish property.
Case study: Income/Mortgage/Monthly repayments
A mortgage of 200,000€ can cost as little as 608€ (approx. £420) a month interest only (interest rate quoted: 3.65%). The equivalent mortgage in capital and interest over 30 years would cost 914€ (approx. £630). To qualify for this, you would be required to show net earnings in the region of £1,500 per month.
Additional information
Euro, Sterling and US Dollar mortgages are all available on a repayment, interest-only, basis.
Spanish lenders assess loan eligibility on the applicant's ability to service the loan, and not on any potential future rental income.
Subject to status, mortgages are available for the following types of purchase: off-plan, existing freehold, rustic, new build, or property in need of renovation.
Documentation you will need to apply for your Spanish mortgage
In addition to your passport(s), you will also need to have the following documentation to hand:
- Proof of UK residence (e.g. driving licence, council tax receipt)
- Six months' personal bank statements illustrating declared income and outgoings
- Three most recent wage slips, plus your latest P60
- If self-employed, audited accounts for the last two years
- Last two years' tax returns and a letter from your accountant confirming your income and tax payments for the previous year
- Proof of any other sources of income that you may wish to borrow against
- Copy of any tenancy agreements on buy-to-let properties
- Details of any pension you may be receiving.
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