Loans / Mortgages
We always advise our customers to first investigate the market before negotiations begin or they pay a deposit on a home. Although some companies will tell you something else, it is only possible to make 100% loan in some cases. Below you will find a brief summary of loan types and opportunities in Spain, and important factors for the bank in their decision to give you a mortgage.
Mortgages in Spain:
- Interest-only mortgage loans: With this type of mortgage, the actual loan will remain the same throughout the entire term. During the term, you only pay interest. With this type of loan you can only borrow up to 70% of the value.
- Common Mortgage Loans: With this type of loan you will repay the loan during the term and you will pay interest over the current loan amount. Normally, the total amount you have to pay per Month, is higher than a interest-only loan. With this type of loan you can only borrow up to 80% of the value.
- Combined mortgage: A number of banks have products that combine the two loan types. Here you only pay the interest rates during the first part of the term, either equivalent to one third of the maturity or a fixed number of years.
What the bank emphasizes in the decision-making process to give you a loan?
- Age: Most banks in Spain use age limits up to 70 years. With some banks you can get a loan up to 80 or 85 years. In some cases, it is possible to let someone younger, ie. a child or another to take the loan with the elder to extend the term.
- Net income: You must spend max. 40% of your net income on your mortgage.
- Valuation of the property: The bank must have a valuation made by an independent agency appointed by the bank. Most banks will base the mortgage on the valuation or the actual selling price. They will take the lowest of the two. Some banks use the valuation only, and with these banks, if the value is significantly higher than the selling price, you can get 100% funding. In most cases, however, you must realize that you properly have to invest 30%.
- Resident or non-resident: If you are a resident of Spain, you can often get a better deal than if you are non-resident.
Before you begin to choose and visit properties, we recommend that you restrict your search to a budget that is reasonable and based on the above factors.
We collaborate with several banks and can help you with contact, etc.