If you are thinking of moving abroad or just to spend holidays in Spain, you are taking a big step, but it doesn’t have to be hard or difficult. If you do your homework it can be smooth and easy. Mortgages have become a really easy matter due the increasing number of expats and many Spanish Banks and foreign banks in Spain willing to work mortgages for foreign buyers.
There are some specialist mortgage brokers out there and they will charge usually a 250£ for an application/study fee and anywhere from 0.5% to 2% for a successful mortgage. You may be aware that some of them are not experience and successful, so you need to do some good research before you committed to one broker. But hiring one will increase your chances of successful mortgage.
How to choose?
You should analyze and compare a few different products and services offered by different Banks or lending companies. It is very important to read all the terms and conditions and if you have any doubt they should be able to clarify all your doubts. Also, make sure the loan company is authorized to operate in Spain with the Bank of Spain.
It is vital that you choose the mortgage that better suits your capabilities and needs. you should pay special attention to the interest rate and repayment period, fees for setting up the mortgage as well as early repayment and cancellation fees.
What are the costs associated?
There are 5 different costs associated with a mortgage:
- The biggest one is the Spanish mortgage deed duty, which represents 1.8% of the loan,
- Bank fees which typically be around 1% to 1.5% of the loan,
- Notary costs which are a maximum of 0.5% of the loan value,
- Valuation fee normally 0.10% of the value of the property and
- Finally any fee you agree to pay a mortgage broker.
All Spanish banks charge an arrangement fee for dealing with your mortgage in Spain. Spanish bank opening fees are payable at completion. All other costs in relation to the Spanish mortgage deed including mortgage tax, registry costs and some of the purchase deed costs are deducted from your gross mortgage advance. As an advice you should allow at least 12. % of the purchase price to cover your purchase and finance costs in Spain in full and that you make sure you are made fully aware of the provision of costs for completion by your lawyer.
The standard Spanish loans to value are up to 70% for non-residents and up to 80% for residents. Most of the Spanish mortgages are always linked to the valuation of the property and they cannot exceed the price declared on the title deed.