Buy a Property in Spain

The lucky few are able to buy property in Spain with cash on the table but most buyers rely on a mortgage obtained either from a Spanish bank, offshore or foreign lender. Even those who have ready cash often prefer to take out a mortgage to pay for their Spanish home. If it's a "buy to let" project that means you can hold on to your capital and earn a good income from your property (which in many cases far exceeds the mortgage repayments).

Some UK banks and building societies offer mortgages for the purchase of Spanish and other overseas properties. Another option is to remortgage your UK home and release the equity to secure your Spanish house.

Buying Property via a Spanish Mortgage

Alternatively you can apply to a Spanish bank for a mortgage (hipoteca in Spanish) in which case you may want to consider using a broker to guide you through the bureaucracy involved. Most Spanish banks are happy to lend to foreigners as long as they are satisfied with the borrower's ability to repay the loan. In the popular coastal areas, most of the banks have at least one English-speaking member of staff so you can literally walk in off the street, open a non-residents account and apply for your mortgage.

  • Spain Beach
  • Spain Beach
  • Spain Beach

The requirements are not dissimilar to those in the UK. The normal limit offered to foreigners is 75% of the property value as assessed by the bank's own valuer (this value is generally lower than the actual market value). The bank will want to see proof of your income and outgoings so be prepared to come armed with all the necessary paperwork. If you're employed, the bank will want to see your pay slips and proof of your monthly outgoings (other mortgage payments or rent, personal loans etc). If you're self-employed you'll need to provide proof of your earnings over the last 2-3 years and the bank will look at your average monthly income as the basis on which to accept or reject your application. Generally speaking, the bank will want to be able to satisfy itself that you can cover all your monthly outgoings, including your Spanish mortgage, with 35% of your proven income.

Most banks insist on life insurance cover and many will only grant you a mortgage if you take out home and contents insurance with them. Most loans are payable over a period of 10-15 years but they can extend over 35 years in exceptional circumstances although the majority of banks will insist on repayment before the age of 70.

Be aware that banks in Spain will charge you an "arrangement fee" for the mortgage - this can be anything from 0.5 - 2.5% of the purchase price (it's not enough that you pay them interest on the loan!).

Also think about the costs involved in monthly transfers of money from the UK (or other countries) to Spain. Currency fluctuations and transfer fees can cost you a fortune. That's one of the many reasons why you may decide to use a broker who might be able to negotiate a special transfer deal with the bank, buy currency at a commercial rate and secure a fixed exchange rate for up to 12 months.

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