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Securing a Spanish Mortgage

 

In Spain, it is not as easy to obtain a mortgage or have a mortgage approved "today" as it was 2 or 3 years ago. With limited money available and many banks and lenders under huge pressure due to their over lending of the past has require many institutions to merge with many needing government assistance or bailouts - therefore this is not an easy time for home buyers wanting to secure a mortgage.  The best mortgage deal currently available are now a maximum of 70% of purchase price subject to conditions and affordability, although there are many banks offering 100% mortgages and interest only deals (for a selected time period) on property for sale they own and want moved.

Spain Assured can help buyers obtain both residential and commercial mortgages in Almeria Spain. We have built a good working relationship with many local lenders and they are all major banking institutions here in Spain. If you require a mortgage we can do the preliminary work for you by finding out whether you are eligible for a pre-approved mortgage prior to finding your Almeria home on receipt of your financial information. This will save you much time and will make the whole buying process much easier. Please contact us for further information.

 

Spanish Mortgage Guide

A Spanish mortgage is the normal way to finance a property for sale in case you do not have the full amount of the purchase price.The mortgage is a contract between the mortgage lender and borrower to assure the borrower will repay the debt. On mortgaging a property, the loan (home mortgage) is secured on the property for sale in Almeria.

 

Documents required to apply for a mortgage

 

Basic Requirements

  • Completed mortgage application form (Clerk in the bank will fill this in for you)
  • Original and copy of your passport
  • Original and copy of your residence card or NIE number (If a Spanish resident)
  • Copy of the “Nota Simple” (title deed extract for the property you are looking to purchase) from the Land registry. List of assets (other houses, cars, shares etc.)

 

Pensioners

  • Pension certificate or P60
  • Last six months bank statements
  • Credit report (Experian)
  • Details of other outstanding loans / mortgages 

 

Employed Application

  • Copy of last income tax declaration form, (P60 in the UK.)
  • Original and copy of your last three pay slips
  • Last six months bank statements
  • Credit report (Experian)
  • Employment contract
  • Details of other outstanding loans / mortgages 

 

Self Employed Application

  • Copy of your tax return for the last two years (and tax calculation)
  • Last six month bank statements
  • Credit report (Experian)
  • Accountants letter
  • Details of other outstanding loans / mortgages 

 

Possible Additional Information

  • I.V.A. (VAT) and income tax returns
  • Balance sheets

What is necessary for a Spanish mortgage to have full legal effect?
Mortgage must be formalized in a public deed of mortgage before a Notary.
The property must be registered at the Property Registry with the names of the owners whom the mortgage is given to.
 

Special Cases

You may find that the property for sale in Almeria of your dreams, that you are willing to purchase, is already mortgaged.
You can do either of two things: the subrogation and the novation of the mortgage.

  • The novation (novacion) entitles you to accept the existing Spanish mortgage and renegotiate with the lender better conditions.
  • The subrogation (subrogacion) entitles you to change the actual mortgage lender for another, and obtain a new mortgage loan on the property, with better interest rates.

These operations are subject to the Register and Notary costs.

The Mortgage interest rates.
The interest rate is fixed at the start of the mortgage. The periodic amount for the payment of the principal and interest will not change during the term of the mortgage.

Keep in mind that with this type of interest we are aware of the amount we will be paying until the mortgage term is finished, however, we don’t know whether the interest rate level will be reduced in the market or not.

Adjustable mortgage rate.
The interest rate on your Spanish mortgage will be adjusted up or down according to current interest rate levels. The periodic amount for your main and interest payments will go up or down with these rate charges.

The initial interest will be initially lower. The mortgage company normally uses this tool to make the mortgage offer more attractive, later on this interest may convert into an excessively high interest.

 

Cost and Legal Fees

If you intend to mortgage a second hand property, be aware that you should face the cost below:

Valuation of the property for sale in Almeria:
Request of extract (Nota Simple) issued by the Spanish Property Registry, which shows the latest recorded details of any charges on the property.

Bank mortgage opening fees:
It shall be paid when signing the deed. This fee varies depending on the lending bank you deal with.
Theoretically this commission serves to cover the costs the bank has incurred for studying the concession of the loan to the borrower. Some banks do not charge this fee.

Stamp duty:
These fee vary depending on the guaranteed capital of the mortgage.

Insurance:
The banks normally require the borrower to contract; at least, a fire insurance to protect its interest until the loan is repaid. The insurance fee must be paid when you sign the title deeds.

 

Management of the Loan Binding Offer

Once you have decided which Spanish mortgage best suits you, the mortgage lender will analyze your current income and basic credit history situation in order to qualify you for the maximum loan amount.

What must the mortgage offer contain? Interest rates, fees, payment terms and the interest on delayed payments.

 

Formalization of a Mortgage

Your Spanish mortgage is formalized at the signing before the Public Notary. Both parties must be present at the signing of the deeds, and the Notary shall make sure that the borrowers understand everything they are signing.

The borrower should examine the mortgage conditions, especially when the mortgage interest rate is variable. The bank will keep a true copy of the deed to be filed before the court in case the borrower does not pay the mortgage.

 

Spanish Mortgages - What’s New?

Over the past twelve months, fierce competition between lending banks has led to better than ever mortgage products being available for both resident and non-resident buyers. In particular banks previously appeared to make the mortgage process for non-residents a long and arduous task, now realise that they have been missing out on a lucrative part of the market. Most banks have reviewed their service and are now encouraging non-residents with vastly improved products.

As well as the traditional ‘capital and interest’ mortgage, we now see interest only mortgages becoming available along with attractive fixed interest rate options. Upper age limits have been increased, as has the loan to value amount. Life assurance cover is often not compulsory and redemption penalties have been reduced or hidden of. Also, loans for construction or purchasing ‘off pal’ have become more flexible. Several lenders have schemes to enable the purchase of a new property for sale in Almeria prior to the sale of your current home.

If you are considering purchasing a property for sale in Almeria, Andalucia, and need an initial or 2nd mortgage, then get advice on all of the options currently available, and select the most adequate mortgage offer. The trend for new and innovative, Spanish mortgage products should hopefully continue, bringing more variety, better terms and increased efficiency – all good news for you, whether this is your first or second mortgage.

 

Mortgages in Spain and How to Avoid Penalty Costs

When acquiring a mortgage in Spain it is important to be aware that  mortgages can vary considerably from those available in the United Kingdom.  Spanish lenders calculate the amount to lend to an applicant, in a different way than would be done in the UK. Also the various lending institutions have different preferences on the types of Properties that they will lend on, and this is then reflected in the level of Loan to Value  they are prepared to offer on individual property types. It is also prudent to be aware that many Spanish Lending institutions apply financial penalties to their mortgages.

For example:
If you were to pay off your mortgage before the end of the agreed mortgage term, which means at any point prior to the last day of your mortgage term, an early re-payment penalty would be charged, Costing You Thousands and Thousands of Euro's. Also if you were to  make any additional lump sum payment or even larger monthly payments to reduce your outstanding mortgage balance, there could be financial penalties which again could Cost You thousands and thousands of Euro's.

LEGAL DISCLAIMER. Although accurate at the time of writing the information contained in this document does not constitute a legal contract or legal advice.  Please note that we cannot be held responsible for the contents and private legal advice should be taken.  No claims against Spain Assured Property, or its employees, in respect of the information above will be accepted.

 

Local Banks

Below is a small selection of local banks providing banking services such as mortgage advise. 

 

Santander

Contact Name: Lyndsay Mocbride

Av. Andalucia s/n,

Centro Montemar, 

Mojacar 04638

Tel:950478060  Fax 950472100

 

Sabadell

Contact Name: Jose Torres (Speaks English) 

Av. Andalucia 22

Edfmulticentro Local 25

Mojacar 04638

Tel: 950 475 882  Fax: 950 475 883 

 

Mortgage and Repossessions Rules in Spain

Sadly, according to the latest figures released, home repossession orders have risen exponentially and the trend looks like it will continue. The number of homeowners facing repossession orders after failing to keep up with mortgage repayments in many European countries is staggering. One of the main consequences of the credit crunch (banks making bad choices by over pricing property and therefore creating a bubble) is more expensive repayments for new mortgages and a cut in the availability of deals. 

What is worse is that the banks are being bailed out by governments for their mistakes and the general public now have to suffer trying to make their mortgage payments or else lose their homes. In many cases the home owner is under water (mortgage higher than the value of the property) and therefore do not only loose their home, but they are also left with a huge debt which in many cases the banks pass on to debt collecting companies. 

For those in trouble with their mortgage repayments in Almeria southern Spain, I would like to provide an overview of how Spanish law deals with mortgage arrears and repossession cases although much depends on the Court.

 

FIRST STAGE; The borrower falls into arrears. At this stage the lender will try to contact the borrower to get an explanation about the arrears and start to charge extras such as different interest rates and penalties. Mortgage lenders also attempt to renegotiate alternative arrangements

 

SECOND STAGE; In default. 90 days after the first arrears

Lender's debt collection department try the last attempt to recover the debt

 

THIRD STAGE; A last chance of 10 to 30 days after default. A duly attested summons (Requerimiento Notarial) or certified fax must be sent from the lender to the borrower informing about possession proceeding through the court

 

FOURTH STAGE; Repossession order is one week after the summon and  legal action start against the borrower. The lender's lawyer try to obtain a executory judgment for the payment of the overdue mortgage and by public auction the mortgage property will be sold.

 

FIFTH STAGE; The Court sets a date for public auction 4-16 months after the legal action start. If nobody bids, the lender will be the new owner of the house for 50% of the property value. I have to say that the borrower always owe to the bank much more money than the property value. It must be added interest of arrears, demurrage, court costs etc. Although the house has been sold the borrower is still left owing a lot of money so the lender will keep pursuing.

If you have a guarantor the lender will start the proceedings against him in order to obtain the rest of the debt. The new owner of the property is registered in the Land Registry.

 

SIXTH STAGE; Eviction is 6 months after the auction. Police Court, officers and a locksmith will evict the borrower. It is very difficult to evict if there are tenants or children and this circumstance is previously notified in the Land Registry. For example divorced couple own the house and one day none of them pay the mortgage. 

If when they got divorced they submitted in the Land Registry that use of the house would be for the spouse and the children the situation is that is quite impossible to evict the family but the debt remains.

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SPI | Indalo Casas
Avenida de la Luz, Nº16,
Mojácar 04638,
Almería

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