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If you take out a mortgage to support the purchase of a property in Spain, then you have two options:
We recommend this option first, as it will definitely be cheaper in terms of handling charges, even if interest rates in Spain over those have failed a little lower in the last few years in England. Another advantage is that you have already made the necessary arrangements before coming to Spain, so you already know that you are financially protected when you arrive in Spain.
Mortgages issued by Spanish banks for non-residents for a period of 5 to 25 years. If you live in Spain, you may be issued a mortgage over 30 years.
Normally it is possible to get a mortgage for up to 70% of the property value, although mortgages from 50% to 60% are also normal. If you opt for a mortgage of 50%, associated with the purchase of the property cost is deducted from the amount of the mortgage. In some special cases it may be possible to get a loan of up to 80%, which is then, however, associated with an unusually high rate of interest.
A mortgage must have been fully repaid as soon as the applicant is 75 years old. If you should be 64 years old already, you will only display a maximum of a 10-year mortgage.
As of January 2008, the typical interest rate on a mortgage in Spain is between 5.5% and 5.8%, depending on the type of loan.
In assessing the approach, the bank will want to see your last three payslips (your last P60 could also be useful). If you are self-employed, an insight into the last three years of your accounts and an official tax receipt is required.
If you can bring copies of your bank statements for the last six months, and / or a letter from your England bank, it would also be helpful. The exact list of documents required will depend on individual circumstances, but we'd love to be able to advise you individually prior to your visit in Spain.
When applying for a mortgage, household income is assessed. If you have a working spouse working, the bank will also want to see the pay slips or accounts.
In Spain, banks can only issue mortgage if you own your home already. For a new property this can be done only after the house is completed. A new property will probably take months to complete.
However, it is still expected of you that you are making payments of up to 75% of the property value in various stages of completion.
To overcome this problem, the bank will issue you a letter of intent to then present these to your own bank in England or bank which here in Spain (we will help you to open an account). The MoU should be sufficient to place a temporary bridge financing for staged payments.
If your mortgage is less than 50%, then it may be possible for a large final payment on completion to negotiate with the client in order to avoid the need for a bridge loan.
Approximate monthly repayments on a mortgage of 100,000 euros:
|Interest Rate||Monthly. Repayments over a period of 15 years||Monthly. Repayments over a period of 25 years|
|5.0%||790.79 Euro||584.59 Euro|
|5.5%||817.08 Euro||614.08 Euro|
You should estimate the cost of setting up a mortgage (up fees, application fees, appraisal, notary, etc.) to approximately 3.5% of the amount of the mortgage if the mortgage is more than 50,000 euros, or about 5% if the mortgage is under € 40,000.
Do you want to buy Villa? Your C & W Real Estate Ibiza team is pleased to advise you.