Mortgages in Spain: A Brief Overview

Mortgage Lenders

Numerous lenders operate in Spain offering a variety of mortgage plans. Financing can be obtained from national banks, savings banks and international banks, including British banks like Barclays and Lloyds TSB, all of which offer differing costs and contractual terms. Although interest rates are calculated according to the base rate set by the European central bank, mortgage lenders are free to set their own charges and terms and can therefore not only vary from bank to bank, but also even from branch to branch.

Types of Mortgage Plans

Lenders will offer variable, fixed or mixed rate mortgages. A mortgage plan with variable rates mean that loan payments can fluctuate in the future according to the rate set by the European central bank. Fixed rate mortgages are less common and tend to have higher interest payments in the short term but will always remain the same for the duration of the agreement. Mixed mortgage plans are built on agreed periods of time with different interest rate payments.

Mortgage Terms

Spanish mortgage terms range from 5 to 40 years depending on the selected provider and the average loan to the property value typically lies between 60% to 70%. The loan sum is determined by a multiple of your proven earnings whereby your loan repayments on all your worldwide borrowing do not exceed 35% of your net annual income.

Do Your Research

Should you require financing to purchase a property in Spain, it is highly recommended that you begin the procedure as early on in the buying process as possible. Applying for a mortgage in a timely manner can ensure that you gain a flexible mortgage plan that suits your individual needs and will continue to be feasible and realistic for you to uphold for the duration of the agreement.

Having your Spanish mortgage in place before you initiate the property search will allow you to have a better idea of what price range is realistic for you as well the likely future financial implications of your property purchase. It will also significantly help you to ensure that you will be able to close the deal and secure your dream property once you find it and submit an offer to the seller.

Seek Professional Advice

Obtaining a mortgage in Spain is a highly regulated process and the consequences of your ultimate decision will affect your financial situation for the duration of the agreement. We therefore always advise our clients to seek advice from a lawyer or a specialist broker who is familiar with the Spanish market and who speaks your language in order to ensure that you avoid the pitfalls that could lose you time, energy and money. For information and contact details on our trusted partners.