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Note: this will give you some idea of the processes involved – it is intended as a general guide only. At Inmoinvestements we will guide you through your own property purchase with our customary care and attention to detail.
A Spanish mortgage is the normal way to finance a property in case you do not have the full amount of the purchasing 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.
In Spain the current mortgage rates are rather interesting, and banks have special products designed for non-resident borrowers. Your bank or your mortgage broker will check which mortgage suits you best.
Your Spanish mortgage will be filed at the Spanish Property Registry.
- Documentation required to apply for a mortgage.
- Basic requirements:
Completed mortgage application form
Original and a copy of your passport
Original and a copy of your residence card or NIE number
Copy of property “Nota simple” (Title deed extract) from the Land Registry.
List of assets (other houses, cars, shares etc.)
further requirements might be neccesary depending on the bank
- Experian credit report
Employees, additional information
Original and a copy of your last three payslips
Copy of last income tax declaration form, (P60 in the U.K.).
further requirements might be neccesary depending on the bank - Self employed, additional information
Copy of your tax returns for the last two years
I.V.A. (V.A.T.) and income tax returns
Balance sheets
Last three bank statements
further requirements might be neccesary depending on the bank
- Basic requirements:
Mortgages must be formalized in a public deed of mortgage before a Public Notary .
The property must be registered at the Property Registry with the name of the owners whom the mortgage is given to.
Special cases.
You may find that the property of your dreams, that you are willing to purchase, is already mortgaged.
You can do either of two operations: the subrogation and the novation of the mortgage.
*The subrogation (subrogación) 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 mortgage interest rates. Spanish mortgage
- Fixed rate mortgage:The interest rate is fixed at the start of the mortgage. The periodic amount for the payment of 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 amounts 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.
- Adjustable mortgage rate:
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 changes. Spanish mortgageThe 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.
- Costs and legal fees.
If you intend to mortgage a second hand property, be aware that you should face costs as follows:
Valuation of the property
- 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 fee
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- 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 or 'Impuesto de Actos Jurídicos Documentados' 0.5%. It must be paid when a notarial document is signed
- Notary and Registry
- These fees vary depending on the guaranteed capital of the mortgage
- Insurance;Spanish mortgage
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