Most Spanish banks (CAM, Sol Bank, Deutsche bank, BBV and Bank of Atlantico) and Building Societies (Halifax, Norwich & Peterborough, Royal Bank of Scotland, and Abbey National) will offer mortgages for properties purchased on the Costa Blanca. Properties bought off plan can also be mortgaged, on completion. The bank will enter into agreement with the purchaser and the loan can be increased up to a maximum of 80% of the valuation of the completed property.
It is important to remember:
Spanish mortgages are written into the Escritura (title deed), thus linking them to the property and not to the person borrowing the money. Like most aspects of property purchase in Spain, your Abogado (Spanish lawyer) can obtain a mortgage for you. However he will probably be dealing with one bank and one sort of mortgage. We, at SCAN PROPERTIES S.L can arrange your mortgage, choosing from a variety of lenders, after appraising your personal circumstances and applying to the appropriate lender. Contact us.
Depending on which lender has been selected to provide your mortgage:
The amount you can borrow will depend on the property price, given the general guide that a non resident can borrow aprox 70-80% It is the job of the Tasador (valuer) to achieve the best possible valuation. There are independent Tasadors, but some banks will accept valuations from a variety of companies, others have their own Tasador, but the resulting valuations can vary considerably.
The maximum amount you can borrow will also depend on your income. In general the rule of thumb is that you will be advanced up to 3 times your gross annual income, but usually the monthly repayment should be under 33% of your net disposable income.
Currency of mortgage:
Mortgages are available in most major currencies. We strongly advise however, that you set up your mortgage in EUROS. This safeguards your risk of exposure to currency fluctuations. Your monthly repayments will also fluctuate if you borrow in a currency, which does not have a fixed value against the Euro, depending on whether the currency of your mortgage weakens or strengthens against the Euro. Some UK lenders will only lend in Pound Sterling, however and if your circumstances dictate that you use one of these lenders then we will advise you accordingly.
Interest rates for mortgages in Euro are based on EURIBOR (Euro Inter Bank Offered Rate). The lenders will normally charge EURIBOR + 0,75% but individual circumstances will determine the exact interest rate, which could be higher or lower. Fixed rate mortgages can be arranged at slightly higher rates of interest. Interest rates will vary depending on the currency you choose to borrow.
Maximum repayment term:
In general, the maximum repayment term is 15years, but up to 25 years can be arranged. This will be dependent on the age of the borrower. The eldest partner must not go beyond his 70th birthday by the end of the term of the mortgage. This means that for a couple, where the eldest partner is currently 55 years old, the maximum repayment term on offer would be 15 years.
Most lenders will permit early repayment. The cost of this will vary from zero to 1% depending on the loan. Some lenders charge for cancellation only in the first 5 years. You must let us know if you are considering an early repayment option, so we can choose the appropriate lender for you.
Note: Bank charges and commissions for transferring money from the account vary considerably from bank to bank. It is useful to select a bank with online banking facilities to enable you to check if the bills have been paid in your absence and to transfer funds without paying commission.
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