An Independent Mortgage Broker will have researched the local lenders and be familiar with their lending requirements and little idiosyncrasies. This makes selecting a mortgage to match your individual requirements generally a much easier process.
When purchasing a new home, there are many things to co-ordinate along with the mortgage. An Independent Mortgage Broker will remove the time consuming and often daunting task of searching for a mortgage and help to make the whole process as smooth as possible.
What Institutions Provide Mortgages In Spain
Most of the major Spanish Banks and Savings Banks will advance loans for property purchase. International Banks represented in Spain and Lenders in Gibraltar will mortgage Spanish properties. Each Lender will have their own lending criteria.
What Important Points Should I Consider
It is normal to be charged an arrangement fee of between 1-1.5 per cent of the mortgage loan advanced
Besides a valuation fee, you will have to pay the Notary costs, Taxes, Property Registration and Legal Fee of the Lender.
The lender will require evidence that you are able to meet the monthly repayments
How Much Can I Borrow
As a general guide, a non-resident will be allowed to borrow 70-75 per cent of the valuation or purchase price. Residents can normally borrow up to 80 per cent.
You can usually borrow up to a maximum of three times your gross annual income; however some Spanish Banks will look at your monthly net income and your mortgage repayment cannot exceed 30-35 per cent of this figure.
Which Currency Should I Borrow In?
Mortgages are available in most major currencies You should be aware that, if for example you earn in sterling and you take a euro mortgage you are running a ´currency risk´i.e. if the £ sterling weakens against the euro your monthly repayments will become more expensive. However, your property is valued in euro in a country that is always likely to have euro as its trading currency.
What Rate Of Interest Will I Pay
Majority of Spanish lenders use the index EURIBOR (Euro Interbank Offered Rate) as the reference point for calculation of mortgage interest rates. At the time of writing, EURIBOR is 4.5, the usual margin added is 1-1.25 points, and this gives a standard variable rate of 5.5%. This figure is intended as a guide only because individual circumstances can dictate higher or lower rates.
How Often Will My Interest Rate Be Reviewed
Usually, once a year. If interest rates have increased during the year this will be reflected in your new monthly repayment and vice versa if interest rates have decreased during the year. The advantage of this method is that you don´t have to constantly change your budget.
What Personal Information Will The Bank Require
All lenders vary in the amount of information they require (your broker will know what each lender will require). As a rule of thumb, the minimum information needed for employed people will be:-
- Copies of last three salary slips
- Copy of last Tax Declaration (P60 in the UK)
- Copies of current Bank statements/Bankers reference
- Copy of Passport/Residencia
Self-Employed people will need to supply:-
- Copies of accounts for 2/3 years
- Accountants letter confirming annual personal drawings from the business
- Copy of last Tax Declaration
- Personal Bank statements
- Copy Passport
