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In Spain, it is not as easy to obtain a mortgage or have a mortgage approved "today" as it was a few years ago. With limited money available and many banks and lenders under huge pressure due to their over lending of the past has require many institutions to merge with many needing government assistance or bailouts – therefore this is not an easy time for homebuyers wanting to secure a mortgage.
The best mortgage deal currently available are now a maximum of 70% of purchase price subject to conditions and affordability, although there are many banks offering 100% mortgages and interest only deals (for a selected time period) on property for sale they own and want moved.
A Spanish mortgage is the normal way to finance a property for sale in case you do not have the full amount of the purchase price. The mortgage is a contract between the mortgage lender and borrower to assure the borrower will repay the debt. On mortgaging a property, the loan (home mortgage) is secured on the property for sale in Almeria.
Basic Requirements
Completed mortgage application form (Clerk in the bank will fill in this for you)
Original and copy of your passport
Original and copy of your residence card or NIE number
Copy of the “Nota Simple” (Title Deed extract) from the Land registry. List of assets (other houses, cars, shares etc.)
Pension certificate or P60
Last six months bank statements
Credit report (Experian)
Copy of last income tax declaration form, (P60 in the UK.)
Original and copy of your last three pay slips
Last six months bank statements
Credit report (Experian)
Employment contract
Copy of your tax return for the last two years (and tax calculation)
Last six month bank statements
Credit report (Experian)
Accountants letter
I.V.A. (VAT) and income tax returns
Balance sheets
Mortgage must be formalized in a public deed of mortgage before a Notary. The property must be registered at the Property Registry with the names of the owners whom the mortgage is given to.
You may find that the property for sale in Almeria of your dreams, that you are willing to purchase, is already mortgaged. You can do either of two things: the subrogation and the novation of the mortgage.
The novation (novacion) entitles you to accept the existing Spanish mortgage and renegotiate with the lender better conditions.
The subrogation (subrogacion) entitles you to change the actual mortgage lender for another, and obtain a new mortgage loan on the property, with better interest rates.
These operations are subject to the Register and Notary costs.
The interest rate is fixed at the start of the mortgage. The periodic amount for the payment of the principal and interest will not change during the term of the mortgage.
Keep in mind that with this type of interest we are aware of the amount we will be paying until the mortgage term is finished, however, we don’t know whether the interest rate level will be reduced in the market or not.
The interest rate on your Spanish mortgage will be adjusted up or down according to current interest rate levels. The periodic amount for your main and interest payments will go up or down with these rate charges.
The initial interest will be initially lower. The mortgage company normally uses this tool to make the mortgage offer more attractive, later on this interest may convert into an excessively high interest.
If you intend to mortgage a second hand property, be aware that you should face the cost below:
Valuation of the property for sale in Almeria
Request of extract (Nota Simple) issued by the Spanish Property Registry, which shows the latest recorded details of any charges on the property.
Bank mortgage opening fees
It shall be paid when signing the deed. This fee varies depending on the lending bank you deal with. Theoretically this commission serves to cover the costs the bank has incurred for studying the concession of the loan to the borrower. Some banks do not charge this fee.
Stamp duty
These fee vary depending on the guaranteed capital of the mortgage.
Insurance
The banks normally require the borrower to contract; at least, a fire insurance to protect its interest until the loan is repaid. The insurance fee must be paid when you sign the Title Deeds.
Once you have decided which Spanish mortgage best suits you, the mortgage lender will analyze your current income and basic credit history situation in order to qualify you for the maximum loan amount.
What must the mortgage offer contain? Interest rates, fees, payment terms and the interest on delayed payments.
Your Spanish mortgage is formalized at the signing before the Public Notary. Both parties must be present at the signing of the deeds, and the Notary shall make sure that the borrowers understand everything they are signing.
The borrower should examine the mortgage conditions, especially when the mortgage interest rate is variable. The bank will keep a true copy of the Title Deed to be filed before the court in case the borrower does not pay the mortgage.
Over the past twelve months, fierce competition between lending banks has led to better than ever mortgage products being available for both resident and non-resident buyers. In particular banks previously appeared to make the mortgage process for non-residents a long and arduous task, now realise that they have been missing out on a lucrative part of the market. Most banks have reviewed their service and are now encouraging non-residents with vastly improved products.
As well as the traditional ‘capital and interest’ mortgage, we now see interest only mortgages becoming available along with attractive fixed interest rate options. Upper age limits have been increased, as has the loan to value amount. Life assurance cover is often not compulsory and redemption penalties have been reduced or hidden of. Also, loans for construction or purchasing ‘off plan’ have become more flexible. Several lenders have schemes to enable the purchase of a new property for sale in Almeria prior to the sale of your current home.
If you are considering purchasing a property for sale in Almeria, Andalucia, and need an initial or 2nd mortgage, then get advice on all of the options currently available, and select the most adequate mortgage offer. The trend for new and innovative, Spanish mortgage products should hopefully continue, bringing more variety, better terms and increased efficiency – all good news for you, whether this is your first or second mortgage.
When acquiring a mortgage in Spain it is important to be aware that mortgages can vary considerably from those available in the United Kingdom. Spanish lenders calculate the amount to lend to an applicant, in a different way than would be done in the UK. Also the various lending institutions have different preferences on the types of Properties that they will lend on, and this is then reflected in the level of Loan to Value they are prepared to offer on individual property types. It is also prudent to be aware that many Spanish Lending institutions apply financial penalties to their mortgages.
For example:
If you were to pay off your mortgage before the end of the agreed mortgage term, which means at any point prior to the last day of your mortgage term, an early re-payment penalty would be charged, that could cost you 1,000s of euros. Also if you were to make any additional lump sum payment or even larger monthly payments to reduce your outstanding mortgage balance, there could be financial penalties which again could cost you a lot of money.
Please email us for further information.
LEGAL DISCLAIMER. Although accurate at the time of writing the information contained in this document does not constitute a legal contract or legal advice. Please note that we cannot be held responsible for the contents and private legal advice should be taken. No claims against RMB Spain, or its employees, in respect of the information above will be accepted.