Mortgages

Guide to buying abroad in Spain and The Canary Islands

Mortgages abroad in Spain Spain is a country almost as large as France. Together with Portugal, with which it has a long land border on the west, it forms a large peninsula south of the Pyrenees, with the Atlantic Ocean on its western and northern side and the Mediterranean Sea to its south and east.

It is advisable that all residents obtain a residence card even if it is not obligatory for them, as it is easier to carry than a passport, and simplifies many of the other administration procedures for new residents. You may wish to check up on the do's and don'ts of this procedure, there are two types of residency card.

Self-certification mortgages are not available in Spain although self-employed mortgages are. The lender will require three years' accounts as in the UK. Most mortgages are mainly variable with some long term fixes available. Financial institutions will offer you a choice of repayment plans which usually include;

Endowment Mortgage - whereby every month or quarter you make two separate payments, one for the interest on the loan, the other for the premium on the endowment policy.

Capital Repayment Mortgage - whereby you make either monthly or quarterly payments of interest and capital on the mortgage.

When buying in Spain fees are approx. 11%. If you take out a Spanish mortgage a further cost will be passed on to you by an official called a notary for registering the charge of the lender with the land registry. It is advisable to obtain independent legal advice to protect your own interests here. If you are buying a new property you do not own the property until the work is completed and you are in receipt of the relevant certificates.

If you are financing a new property you will be issued a 'letter of intent' by the lender up until the property is completed, rather thana mortgage in principle. You can approach a specialist lender if you would rather remortgage and a 10% deposit will usualy be required which is held with the estate agent.

If you are planning to take out a mortgage you should try to ensure that your contract has a completion date specified. You can take legal action against a vendor and secure twice the depsit as compensation.

 

General Borrowing Guideline

Once the applicants existing monthly outgoings have been take in to account, not less than 65% of your monthly salary should be left available to cover the mortgage repayment. If you are self-employed your income is assessed as the average of the last three years' net income. Unlike with many overseas mortgages there will be some consideration given to rental income.

If employed a lender will base your income on your payslips and the amount that is credited to your account monthly. Outgoings considered are liabilities such as mortgage/rent in the UK, personal loans & maintenance commitment. Valuations are carried out by the lenders and typically start from 285 Euros. The Arrangement fee is approx. 1% of the loan amount. All mortgages are full status and proof of income and outgoings will be required. Spanish mortgages can be arranged for acquisition, renovation & construction. Due to the nature of financing new properties a "letter of intent" is issued by lenders rather than a mortgage offer until the property is completed.

Overseas mortgages

Employment in Spain

You will need to get an official work contract that you should have translated if you are not fluent enough. Your contract could vary and cover you temporarily for 3/6/9 months.

If your employer would like to keep you on after this initial short term contract, s/he will need to issue you with a new long term contrac and can not continue issuing you with short term contracts, your employer could be liable to face legal action if s/he does this. Do not take jobs that only pay in cash as you could be caught, fined and immediately sent home.

Bringing pets in to Spain

You will need to present certificates of origin and good health at customs. These will need to have neem signed by officially recognised veterinaries in the UK. The certificate should state the date and nature of the vaccines administered especially the anti-rabies vaccine.

Click here for more information about buying in Spain.

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