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Here is a simple step-by-step guide to how the mortgage process works
After receiving a completed online enquiry form, one of our advisers will contact you to discuss your options and a mortgage quote will follow shortly thereafter. They will advise you on the terms of the mortgage, such as monthly payments, level of borrowing, interest rates, fees etc. We aim to send out quotes within 48 hours of your initial enquiry.
If you wish to proceed and have found a property, or wish to finance an existing property, you will need to send copies of various documents to us. Your adviser will confirm what is required.
You will normally need to sign a reservation contract and pay a reservation fee/deposit at the start of the purchase process – the estate agent usually arranges this part of the process. Before you sign any contracts, we recommend that you appoint a lawyer. He will ensure all the necessary checks on the property are carried out and checking the legal status of the property. Also, completion of the mortgage is not possible until you have applied for an NIE number, which your lawyer can help obtain for you.
A bank account will need to be opened in your name with the bank arranging the mortgage. Sometimes this is done at the outset and other times after the formal approval has been granted. Most banks instruct a valuation after the formal approval but some require this to be done at the start of the process. Monthly mortgage payments have to be paid from this account and funds to cover the valuation fee have to be paid into it before the valuation can be instructed. When instructing the valuation, the bank will usually select a company at random from the panel of independent companies it uses for valuations. The selected company will send one of their valuers to the property by prior appointment. After the visit, the valuer will prepare their report and then send it to the bank.
On the strength of the value of the property and the documentation provided, the credit department (underwriters) of the appropriate bank will approve or decline the mortgage. If approved, the bank will confirm the final conditions. Assuming all parties are in agreement to proceed, the bank will then liaise with you, the agent and both lawyers to calculate the funds that you need to have in your account. Once the funds are in place, the arrangements for completion can be made.
An appointment must be made at a notary office to sign the deeds. You or your legally appointed representative must attend the completion. If you do not attend, your legal representative must present a suitable "Power of Attorney" ("Poder" in Spanish) document.
Initial advice with no obligation
There is no initial charge for simply discussing your situation with us. Most enquiries will lead to us sending a mortgage quote outlining a potential mortgage for you.
Fully independent advice
We can offer you products from all the leading banks in Spain (including all international banks) and will endeavour to find the right mortgage product for you from the most suitable lender.
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Still have questions?
Buy-to-let products do not exist in Spain and never have. Banks do not take into account future rental income.
To be classed as a fiscal resident (one who pays Spanish income tax), usually you need to be paying these taxes before you apply. Some banks will class you as a resident with as little as 6 months’ payslips, if it is clear that you are in a long-term job with a reputable company. Others need to see at least two annual Spanish tax statements (declaraciones de renta).
It is compulsory to have buildings insurance with an insurer of the bank’s choice. In addition, life insurance is nearly always compulsory, also with an insurer of the bank’s choice. We are aware of the banks though that don’t require it.
In nearly all cases, the mortgage will be a repayment mortgage, which means the monthly payment is made up of both capital and interest. Your mortgage will be paid off in full at the end of the term. Some lenders allow you to pay interest-only during the first one or two years of a construction mortgage, but not for the purchase of an existing property.
Please refer to our Charges page for an example breakdown and explanation of the different charges. At the moment, a general guide is 14-15% of the declared purchase price.
There are many variables that affect the cost when stated as a percentage of the purchase price. For example, taxes vary from region to region and, in some cases, according to the property price. Another important factor is whether clients are applying for the maximum mortgage or a lower amount. We advise all clients to contact us for an estimated cost breakdown relative to their circumstances.
The timescales involved vary from bank to bank and at different times of the year. We usually say to allow between 4-6 weeks for the whole process and it can take up to 8 weeks to complete, sometimes longer if the holiday month of August falls in between, or if you have a complicated profile.
To determine what you can borrow, lenders look at your ability to pay and typically allow between 30 and 40% of your net monthly income after tax to pay for all worldwide debts (including the new Spanish mortgage). If you have loans, mortgages or credit cards, these will be taken into account in the calculation, as well as rental payments, alimony (compulsory maintenance payments to ex-spouses/partners or in respect of any children from these relationships) and private school fees.
In most cases, there is a redemption penalty of 0.5% of the amount paid off (partial of full) in the first five years and 0.25% of the amount thereafter.
We strongly recommend that you appoint a lawyer. They will ensure that all the necessary checks are carried out on the property. If anything goes wrong, a lawyer’s job is to protect your interests. We recommend that you appoint a fully qualified lawyer who is registered with the College of Lawyers (Colegio de Abogados). If you do not feel you have been sufficiently protected, you can make a complaint to the College of Lawyers and claim compensation.
This is an identity number for foreigners who register with the authorities in Spain and applicants will receive an official document with their name and number. This number must be presented for various official transactions and it is essential to have an NIE number if you wish to buy a property in Spain. Applying for the number is done via an office of the national police (Policía Nacional) and sanctioned by the Ministerio del Interior (equivalent of the Home Office). Lawyers usually assist with obtaining this number.