How to be prepared to apply for a mortgage to buy your dream home in Spain.

If you are currently searching, or researching, for your new life in Spain, or maybe you are renting and thinking of buying, you need to plan ahead and be prepared, particularly if you want to apply for a mortgage. Apart from providing a loan to buy, there are many other reasons to apply for finance in the form of a mortgage:

- A mortgage allows a higher return in investment. 

- Not tying all your money up in one asset alleviates risk. 

- It may be that you are looking to reduce wealth and inheritance taxes. 

- In Spain it can be problematic to re-mortgage, after you buy, if you need to release equity. 

Here at Jacaranda Spain, we have some things to consider, for those buyers looking for finance to buy their dream home in Spain:

The first question is “are you applying for your mortgage as a resident or non-resident?” Some banks will not lend to non-residents as it is higher risk in terms of debt recovery. Some banks will, but there will be more stringent conditions and more paperwork to be provided, all of which must be officially translated into Spanish. The drawbacks for the non-resident mortgage applicant are worth careful consideration;

-You will be asked to produce your employment contract, proof of earnings, documented credit rating and your tax accounts.

-You will likely only be offered a fixed rate mortgage, over a maximum 20 year period (as opposed to 40 years for those residing in Spain).

-60% of the price of the property is the most you can borrow (80%-100% for residents).

-Interest rates will be higher.

-Tax will be applied if you sell the property as a non-resident.

You can Choose to use a mortgage broker or go direct to a financial institution. 

Consider whether you have all your paperwork in order. This will help to speed up the process and reduce stress! You must have:

1) A purchase agreement from the seller of the property you wish to buy. The process of application can´t commence without this.

2) An up to date passport. 

3) NIE certificate. This is the identification number that anyone wishing to enter a contract, or open a bank account, in Spain MUST have.

4) Evidence of guaranteed income or employment.

5) Full set of accounts showing all assets and liabilities, any other loans and tax returns.

6) Copies of deeds of any other property you own anywhere in the world and proof there are no taxes outstanding on these properties.

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  Consider what type of mortgage is best for you. In Spain you have a fixed rate mortgage, a variable rate mortgage or a combination of the two. Do your research or get the right advice from a specialist.

Furthermore, you should remember that you must have saved 20% of the value of the property to pay the deposit and an additional 10% for costs including; transfer tax or VAT, stamp duty, notary and land registry fees etc.

Spending time now doing some research, getting the right advice and making sure your “ships in order”, will help to make the process down the line less fraught. At Jacaranda Spain, we recommend our clients enlist the services of an established gestor before they start the process. They will help you with your paperwork and represent you directly with your mortgage lender. You should expect the process to take between 6 and 8 weeks. Your chosen gestor should be able to speak your language, if you can´t speak Spanish, and give you the right advice about where to go and the best rates available. Marti Assessors are our “in house” team at Jacaranda Spain and we will work with them, or your own chosen legal team, to make your house purchase go smoothly.

For more advice and an informal chat contact us at Jacaranda Spain or directly to the team of Marti assessors.

http://www.martiassessors.es/