Properties Barcelona – Information on Spanish Mortgages

If you are considering getting finance for your purchase in Spain then you should take steps to arrange the mortgage before you come to Spain. Lucas Fox do not arrange mortgages but we can recommend English speaking advisors here in Spain who can help you out. In order to make sure that you get the best possible deal and a mortgage that meets your exact requirements it is best to speak to an advisor prior to starting to look at properties. The property market in Spain moves quickly and there is nothing worse than losing out on your chosen property because it is not possible to get the finance in place quickly enough,

There are a large variety of Spanish lenders offering mortgages. Mortgages in Spain are offered by banks and savings banks. Some international banks, including British banks offer mortgages in Spain. There are also a huge range of different products on offer which means that it is best to seek professional advice. Although the interest charged on all Spanish mortgages is calculated as a function of the base rate set by the European central bank, beyond that mortgage lenders in Spain are relatively free to set the charges and terms of the mortgages they offer. This translates into significant differences between different products in terms of their costs and conditions.

It is possible to get variable rate mortgages, fixed rate mortgages and recently some lenders have started to offer interest only mortgages. The term of the mortgages on offer can be up to 25 years, or even longer.

Lenders in Spain decide how much to lend you and on what terms according to your personal and financial profile. They will want to know how much you earn and what your other financial commitments are (your personal balance sheet - assets and liabilities). As a general rule of thumb they will lend according to earnings multiples whereby your repayments will not exceed 35% of your net annual income. However if they think you have excellent career prospects and that your income is very likely to increase in the future (something that you would have to convince them of) then they may be prepared to lend you more that the general rule would imply. Also the younger you are the more they may be prepared to lend you (all other things being equal) because they assume that you have a longer working life in which to pay off your mortgage.

In general lenders don't like to lend more than 70% of the value of the property to foreign buyers of Spanish property. In some caases it is possible to obtain a mortgage with a loan-to-value of up to 80% (depending upon the circumstances of the applicant), with the lowest costs on the market and most flexible terms.