Different types of mortgages are offered in Spain. Many have no restrictions on the purchase price, although some products favor buyers of specific rentals or to buy properties in certain regions.
The biggest difference between residential and non-residential loans is the loan at the maximum value that banks will allow. Spaniards can generally borrow up to 80% of the property’s appraised value, while non-residents in our country are limited to 60–70%, depending on the type of mortgage.
The good news is that it is possible to borrow from the bank significantly more than the value of the property, up to 100% in some cases, when buying a property repossessed by a bank or if the client’s monthly income is safe, he has a sufficient equity or a monthly salary of considerable amounts.
In some cases, the mortgage you obtain may be based on the valuation of the property by the bank adviser rather than the price you are paying for it. So if an appraiser values the property at € 125,000, you can typically borrow up to € 87,500, even if its purchase price is just € 100,000.
How mortgages are calculated
Most mortgages are variable rates linked to the annual Euribor (European interbank rate) plus a margin. For example, with Euribor at -0.37% in early 2019, and variable rate mortgage rates ranging from 1.8 to 3%, you could theoretically pay only 1.43%. The banks they also offer fixed rate mortgages, which vary from 2.4 to 3%, depending on the term of the loan.
- Declarations of personal taxes 1 to 3 years of the expense / income balance by the holder.
- Bank statements personal data for the last 6 months showing income and daily activity.
- Bank reference.
- The last accounts of the holder or holders 1 to 2 years including income, expenses and balance.
- Accounting reference that confirms the activity of the company or the individual, the fiscal soundness and a declaration of assets and responsibility.
- Copy of a personal credit file and / or statements of annual debts.
- Copy of identity documents.
- Most banks will classify as self-employed anyone who owns more than 25% stake in the company they work for.
With all this data, the bank will analyze both the value of the home and the client’s tax data. Due to the financial crisis of 2008 and the impact of many clients who received 100% of the mortgages and more who could not pay their debts, the banks do not offer more than 80%, so you should keep in mind that you will need to have saved 20% of the total value of the house and even add management costs (for example, in a house of 200,000 euros, you would need a little more than 40,000). The appraisal of the property seems key in this regard.
At the time of the monthly payment related to the mortgage, the bank will require that it be no more than 30-35% of the monthly earnings of the mortgage holder or holders. Score positively to be granted the mortgage that your employment contract shows as indefinite (therefore, much better if you are an official) and that you have no other mortgages or pending loans.
The mortgage conditions are hardened if for the property that you request it is not the first home, but a second one with a holiday nature or that is not going to be a habitual residence.