What do I need to make an offer on a Spanish property?
If you are serious about buying in Spain, then we recommend obtaining your NIE number, this is like a national ID number that Spain issues ( we can arrange), and if a mortgage is required a mortgage offer in principle should be obtained and we can help with this.
These two things can put you in a strong negotiating position as you will be ready to complete quicker than most other non-resident buyers.
How much deposit do I need ?
If you live in Spain and are a tax resident you can obtain a mortgage up to maximum 80% of the value or purchase price so you will need 20% deposit. If you are a Non-Resident you can obtain a maximum of 70% of the value or purchase price, and so a 30% deposit is required.
You should also budget 10-12% on top of the purchase price for Taxes, Charges, Stamp duty, Notary and solicitor costs.
What are the costs to buy in Spain ?
The costs to buy property are significantly higher in Spain than other EU countries these can be summarised as follows;
Taxes 6% to 10% (depends on region and new build etc)
Stamp Duty 0.5% to 2%
Solicitor up to 1%
Notary from 0.5% to 1%
Mortgage from 0.5% to 1.5%
Valuation up to €800
As a safe guide you are best to budget around 10-12% (in some cases up to 15%) in costs associated with purchasing in Spain. Example: A €100,000 property you can expect to pay in the region of €12,000 to €15,000 in fees.
Although these can seem high fees, some owners may choose to rent out their property when not in and the Holiday let rental yields can be in the region of 12-18% per annum and can provide a place in the Sun for you and the whole family to enjoy every year.
Will I need a Lawyer / Solicitor ?
A solicitor is highly recommended if not essential to navigate the maze of buying in Spain as well as protecting you from any nasty surprises. If buying with a mortgage you will need a solicitor as the bank will want to ensure the property title is good and that there are no complications with the property’s legals.
In addition you will have peace of mind that this significant financial investment is sound. We can make a recommendation on a trusted solicitor to appoint.
Can I borrow 100% if I don’t have enough deposit ?
If you are a UK resident & a Homeowner, we partner with UK mortgage specialists www.MyMortgageDeal.co.uk who can help to release further capital from the equity in your home. You could release up to 85% of the value of your UK home to contribute further funds to the purchase of a property in Spain.
Some clients have secured 100% finance by raising some or all the funds on their UK property in addition to a smaller Spanish mortgage. Get in touch for more information on 100% financing options.
(Only applicable to UK based Home Owners)
What is the Maximum age I can obtain a Spanish mortgage to?
Banks generally permit a repayment term up to age 70 or in some cases 75. There will be a requirement for an affordability assessment of your proposed income where the mortgage term extends past planned retirement age.
What are the best Spanish Mortgage interest rates that I can expect ?
Rates range from 0.9% above Euribor, though a typical rate would be 2.19% for a 5 yr fixed (As of Jan 2021) however it really depends on the bank, the loan to value and the calibre of the client to some extent.
Interestingly some Spanish banks are offering long term fix rates with one lender quoting 2.49% for a 20 yr fixed deal (May 2021) . Its worth checking with us the live rates at the time of your enquiry.
What banks do you work with ?
We work with a wide variety of banks in the UK & Spain and some you may not have heard of before. In fact, there are also a number of international banks that operate in Spain such as ING and other non-High St lenders.
What documents will I need?
The process of document submission is similar to the UK mortgage process. At the outset we require:
Bank Statements (3-6 months)
Income verification (employed or self-employed)
Wealth statement Assets Versus Liabilities
Tax Ref number
Overview of commitments
The list above is not exhaustive, and these are the minimum documents required to generate a free approval from the lender. More documents may be required on the full application.
What are the advantages of a Spanish Mortgage?
Aside from the obvious advantage of not having to use your own hard-earned savings, you may be able to benefit from a reduced tax bill, either from an inheritance tax or rental income tax liability.
In addition, getting a Euro mortgage may reduce exchange rate risks, and a mortgage may give you the ability to up your budget to a better or bigger property too, one that the whole family may enjoy!
Another hidden advantage is, if you buy your Spanish home in cash without a mortgage, you may find it difficult to re-mortgage the property to extract some of the capital back out. This is because the mortgage market currently in Spain does not have many re-finance options with capital raising. So taking a mortgage at the start of the purchase leaves more capital in your hands in contrast to attempting a refinance later down the line.
What about Brexit & buying in Spain ?
Now that Brexit is done, we believe to buy in Spain is still a popular choice. It historically has always been a favorite investment and lifestyle choice way back in the 1970s prior to the formation of the EU and subsequently throughout the period of EU membership, so we don’t believe this has changed Post Brexit.
The housing market activity also suggests this is the case with increases in house purchase activity from Non-Resident clients.
Can I get an ‘Interest only’ mortgage for Property in Spain?
Getting interest-only mortgages is not generally possible for Spanish mortgages. This was more popular in years past when lenders would offer a mixed mortgage for example 5-10 yrs interest only with the remaining 15 yrs repayment. This is no longer possible. So now with Spanish Lenders, you are only to be able to get repayment mortgages.
What you may be able to consider is capital raising on UK property on an interest-only basis and bring these funds across to purchase a Spanish property.
This would be a way to finance the property on an interest only. It’s recommended speaking with a specialist UK broker in this transaction due to the complexities of obtaining interest-only lending in the UK for overseas purchases, visit our linked site www.mymortgagedeal.co.uk for more details.
Can I arrange everything remotely from my home country ?
Yes is the simple answer.. you can obtain your mortgage approval, open a bank account, get your NIE and assign a solicitor all from the comfort of your home & without jumping in a plane to visit Spain.
In fact, we have also seen an increase in properties being purchased or reserved remotely especially with the rise of ZOOM/Skype/Facetime/Whatsapp video calls and Video guided tours of properties. Many clients who holiday and visit Spain know their target areas very well and may know exactly where and what they want to buy.
New builds are also another opportunity for clients to purchase remotely without even visiting. We recommend though you assign a solicitor in the process so you are well protected in the property transaction and deposits that may be required upfront.
We can make trusted solicitor and New Build Property agent introductions should you require this.
Can I get a Self Build Mortgage in Spain ?
There are a small number of lenders who will consider a land purchase and build project Spanish mortgage. Care should be taken in budgeting for such projects and to ensure that you have a bank-approved surveyor and architect on the project to ensure that funds can be released successfully at each stage of the build.
As a guide you can usually secure funding to 60% of the land costs and then ultimately the funds released can go to a max of 70% of the end value of the property, with funds being released in various stages of the build