Unless you already have the savings to buy your property in Spain, there's a good chance you will need to get a mortgage to finance your purchase. You can arrange an overseas mortgage through a UK bank, a Spanish Bank or an international lender. It's also common to raise the funds to buy a home abroad outright by remortgaging your UK property.
Remortgaging your UK home can help you raise the funds to buy an overseas property outright. Whether this is a sensible option for you will depend on your personal circumstances - including how much of your existing mortgage you've paid off and your current credit rating - as well as factors such as interest rates at the time you apply.
The mortgage market is constantly changing, and can be bewildering for even the most experienced property hunters.
In this article you will find expert insight into the potential minefield of getting a mortgage to buy your dream home in Spain.
It’s sensible to get the mortgage process started as early as possible, even if you’ve not begun to look at properties. You need to give yourself time to research the mortgage market, so that you can find the best possible deals and decide on things like whether a foreign currency or sterling mortgage will be most suitable for you.
In particular, you need to establish how much you can afford. An 'Approval in Principle' will tell you exactly how much you can borrow and what price range you can realistically consider when conducting your property search. It will also prove that you’re a serious buyer, could make you better placed to negotiate price with the vendor, and could make the whole process quicker once you’ve settled on a property. Even better, it costs nothing.
It is advisable that you look for the mortgage which is most appropriate for your capabilities and needs. There are a range of mortgages on offer and you should pay special attention to:
-The interest rate and repayment period
-The fees for setting up the mortgage.
-Early repayment and cancellation fees.
When looking for a mortgage to finance the purchase of your home, take these things into account:
-The bank you apply to for the loan will first require you to have the home registered to your name. Generally the purchase agreement and the delivery of the loan (with the creation of the mortgage) happen at the same time, so when the seller and the buyer go to the notary to make their deed of sale, the bank representative goes too, to turn the money over to the seller when the deed is made.
-Mortgage loan agreements are not usually negotiable, and they include general conditions, some of which may be abusive. Bear in mind the terms of consumer and user protection legislation on this subject. It may so happen that the home you are going to buy already carries a mortgage, made by the seller to finance his or her own purchase or, if the home is a new one, made by the promoter to finance construction.
-In these cases it is important for you to know that you are not obliged to take the seller’s place in (be subrogated to) the original mortgage loan. You may demand to have the seller cancel his or her mortgage, while you get a mortgage loan from another financial institution that offers you better terms. If you are going to be subrogated to the loan the seller or promoter took, take these things into account:
+ You must demand a certificate from the seller, issued by the lending bank, showing how much of the loan remains outstanding.
+ You can ask the bank that holds the seller or promoter’s mortgage for a better interest rate and better terms. If they refuse, you can look into having another bank pay off the old mortgage and become your creditor under new, more advantageous terms.
+ This sort of transaction is practically free of charge, because it is tax-free and the notarial and registration fees and the commissions the bank can charge for doing it are very low, by law.
There are 3 options:
1. Remortgaging your current home (i.e. taking a home equity loan).
2. Borrowing from a bank in your current country,
3. Arranging a mortgage on your Spanish property through a Spanish lender.
Bear in mind that an overseas mortgage may incur higher set-up costs (sometimes 3 to 4 per cent of the amount borrowed) and that Spanish lenders will not be interested in doing business if existing loans exceed 35 per cent of the borrower’s income, as is the case in much of Western Europe.
Although opting for your home country may seem easier, because it is more familiar, you should perhaps first consider getting your mortgage in Spain. It may turn out not to be as daunting as you thought!
Getting a mortgage in Spain isn’t so difficult after all. In reality, it’s not so different than how it is in any other European country. The main obstacle may be the language and cultural differences. You can always arrange a Spanish Mortgage through a professional Mortgage Broker in the comfort of your home where you will receive a detailed quotation of the costs and expenses associated with purchasing a Spanish property.
The main ones are the following:
1. Low Interest Rates. Interest rates in Spain vary, but are generally much lower than in the UK.
2. Favourable write off conditions.
3. Absence of large bank expenses caused by money exchanges between international banks.
To initiate a mortgage procedure, the following documents will be required:
-The last 3 months of pay slips or an equivalent source of verifiable income.
-The last 3-6 months of bank statements recording such income.
-The Most Recent P60/tax return.
-A valid copy of the applicant’s passport.
-Employment contract (employed).
-Company accounts. (Self Employed or Business Owner).
-Copy of personal credit report.
Casas Espania are independent Real Estate Agents situated in La Siesta near to Torrevieja with offices on Spain´s Costa Blanca, Orihuela Costa Costa Calida and the Mar Menor. Both the partners and the sales agents of Casas Espania have worked in the Spanish property sector for many years and have a wealth of experience in finding you the best property to suit your needs. In our website you’ll find information on the towns where we have properties for sale in Spain, mostly located the Costa Blanca and Costa Calida.
Contact us or telephone 0034 966 785 202 or 0034 965 083 434 today for further information.