FREQUENTLY ASKED QUESTIONS

How much can I borrow?
Lending in Spain is based on the valuation of the property and usually your income details. For urban properties, You can typically borrow up to 80% of the valuation, whether you are non-resident or resident. These percentages may be lower for rustic land properties.

Lenders also look at your ability to pay and typically allow 40% of your net income after tax to pay for your monthly mortgage payments. If you have loans, mortgages or debt in the UK, it is most likely that this will be taken into account.

Can I do 'Buy-to Let' in Spain?
There are now buy-to-let products in Spain, however, the LTVs are usually lower than with other products, e.g. 50% LTV. Banks vary on how much future rental income they will take into account.

How much will it cost?
In brief, we suggest you should allow 10-12% of the purchase price to cover all costs. These include Transfer Tax (7%), Bank Opening Fee, Valuation, Mortgage Direct, Notary and Land Registry fees.

How long does it take?
Once all documents have been received from you to take out a mortgage, and assuming there are no problems with the valuation report, we anticipate the mortgage process will take 4-6 weeks.

Do I need a Lawyer?
Strictly speaking, the answer is no, however, we strongly recommend that you do appoint one to protect yourself against the pitfalls of buying property abroad. They will ensure that all the necessary checks are carried out. Also, completion of the mortgage cannot take place until you have applied for an NIE number, which your lawyer can obtain on your behalf.

What is the best type of mortgage?
This will depend on your circumstances. There are an abundance of products on the market and Mortgage Direct will discuss what your requirements are before recommending a suitable product.

How do I repay the mortgage?
In most cases, the lender will ask for a repayment mortgage, which means the monthly payment is made up of both capital and interest. The repayments pay off the interest and the initial amount borrowed. Your mortgage will be paid off at the end of the term. Some lenders allow you to pay interest-only. In which case, you will have to find your own investment vehicle to pay off the capital sum at the end of the mortgage term.

Is there a redemption penalty?
In most cases, there is a redemption penalty of 0.5% of the amount borrowed if you pay off the mortgage early or re-mortgage with another lender within the first 5 years and 0.25% for the remainder of the term. However, there are lenders that offer products with no redemption penalty if you feel that you want this built into your mortgage.

What rate will I get?
In most cases, your interest rate will be variable and based on the Euribor, with an additional percentage amount added on top. For example, if the Euribor is 5% and the lender offers Euribor + 1%, your rate would be 6%. Your payments would be reviewed (usually every 6 months) and an adjustment made to the monthly payments to take into account any movements in the Euribor.

Do I have to have insurance?
It is compulsory to have buildings insurance and this is often taken up with the bank that lends the mortgage finance. We strongly advise that you have contents insurance and life cover to protect you or your family in the event of a burglary or death. You may even wish to consider taking out accident, sickness and unemployment insurance. We can help you arrange this if necessary.

What happens after completion?
The new Escritura is normally available within 3 months. This will be available from the Lawyer with your name(s) registered as the legal owner(s).

If we have not answered your question here, please send us an e-mail to info@mortgagedirectsl.com or call us on (+34) 963 156 011 and we will answer it for you.