Mortgage in Spain

[Gerry Pridham]

Hi guys,

I've recently been appointed as an agent of Solbank and of Halifax, though my experience is only in Fuerteventura in the Canaries, the agency is for whole of Spain. Happy to pass any information I have without obligation.

Halifax is a particularly good deal for UK expats, provided you can prove income. They will do up to 15 years interst only and for non-resident, they will lend up to 70% of loan to value (bank valuation) OR 80% of loan to cost (which is purchase price plus all taxes and costs) whichever is lower.

Rates are normally fixed for one year and relate to Euribor (either monthly or annual Euribor rates) and are typically Euribor +1% to Euribor + 1.25% for non-resident depending on LTV and customer credentials. Rates are cheaper for residents, but the acceptance criteria are different.

I think the best thing Halifax offers (for Brits) is a dedicated UK contact, and all documentation in English language.

Solbank, on the other hand, are a bit more flexible with customer forms. But both banks require what you would expect to provide in the UK, i.e.:

proof of income
letter from an accountant verifying your income
Experian credit report

and if you own other properties, a list of addresses, values, mortgages, income and lettings contracts.

[Moneypenny]

Here is some information that may help you;

Any property in Spain that is classed as RUSTICA (defined on the land registry slip known as a NOTA SIMPLE and this is held by the agent or the vendor) is always more difficult to obtain a mortgage on than an URBANA property.

Why? Because there may be doubt over permissions granted many years ago and becasue there is less of a pool of people wanting to buy these properties and this may make it more difficult for the lender to sell the property on if they reposess.

There are lenders who will provide a mortgage on the properties but it is more on an individual basis rather than using the banks traditional criteria but in the current 'risk adverse market' you would be unlikely to pick up more than 50 % of the purchase price in a mortgage. You will also not be able to get a self certified mortgage(no proof of income) on a RUSTICA property or a self certified remortgage in the future.

On the positive side a lot of RUSTICA properties have been re-registered as URBANA so this increases your possibilities.

If you can cope with 50% or less as a mortgage then start your search, and ask for the nota simple for any property that you are interested in. Pass this to a reputable mortgage broker to review and becasue of their expereince they will know if the property and your income will get a mortgage, then you can move forward.

If the 50% is definitely not going to be enough then still look at rural areas but advise your agents that you can only consider URBANA registered properties.

I hope this helps

[MPG]

Hi there,

As a non-resident you will be able to obtain a mortgage of up to 70% of the valuation of the property. As a resident 80% plus. FACT.

I am a resident and bought a finca with a mortgage equivalent to 80% of the valuation.

Regards,

MPG

[Goldberg Global]

Pre credit crunch, banks were offering 90% loan to value, in some cases 100% mortgages, and properties had higher valuations.

Post crunch it is a little different, valuations are coming off, banks are far more cautious who they lend to, impacting the markets and bringing prices off.

Some banks are not even doing some mortgages. Some of the products interest only 30 years, were withdrawn.

So what is fact today, may not be fact tomorrow, it depends on conditions of the market, if the bank is a bank or a caixa, caja, their current market situation.

There are variations in the markets between banks.

[MPG]

Originally Posted by Goldberg Global

Post crunch it is a little different, valuations are coming off, banks are far more cautious who they lend to, impacting the markets and bringing prices off.

Some banks are not even doing some mortgages. Some of the products interest only 30 years, were withdrawn.

I agree with above comments. It has become more difficult since December, however I maintain that you can achieve up to 70% non-resident and 80%+ on resident mortgages for rustica property, not only urbano.

[darlawlor]

Hi Folks,

I am currently toying with the idea of refurbishing a property I own in a village in the Alpujarras. I was wondering what mortgages are available for such a project. Our intentions are to demolish and rebuild and we were looking to borrow in the region of €70k.

[rowlandsbb]

I am not a mortgage broker just an agent who has been a dealer/ investor in UK and Chartered Surveyor but may I suggest that you treat it like a ' professional project'

Get all your plans, building estimates, licences and a valuation of 'value now in existing state' and after ' when you have completed the re build'

Also your plans for supervision of the re build , stage payments to the builders and 10 year structural guarantee arrangements

This will show the profit in the project and there normally has to be a good added value to get finance

Prepare an attractive ' Presentation' ..[ English and Spanish] .then go and see if any of the Spanish banks will lend to you

You will need finance for the re build and then perhaps a mortgage afterwards

In other words the same approach you would have for a similar deal in UK

I would have thought that they will want at least 50% security or cash input from yourself just now

And I also suspect that unless you are Spanish, they will be even more cautious

So, it is going to be difficult as you expect...the other alternative, if you are confident of the project added value, is to raise the money in the UK based on UK assets

Or do not do the re build until economic conditions improve but it will be a long time before Spanish Banks are relaxed with finance again!!.................in fact any Bank anywhere

[Meter Mike]

I doubt you would get permission to demolish and rebuild on a country property, though it is more likely in a town or village.

Brians advice above is excellent and the only way to go IMO.

[rowlandsbb]

Mike

I think you can in certain circumstances and in general it has to be the same footprint and size subject to a small increase

But I would not demolish before having all the rebuild permits and resources to re build

[pneumatic]

Hello All,

This website is very helpful. Maybe you can help me please, this is my 1st post....

I am UK resident and have a CAM bank mortgage on a property in Spain, I want to switch my
mortgage to another lender as I am currently paying too much (6.5% interest) per month.

Can anyone please recommend a company that would manage a switch? I know this needs to be done proffessionaly as it is a legal minefield.

Thankyou in advance to anyone who bothers to reply.