Mortgages in Spain

Many guides about buying property in Spain assume that potential buyers actually have the money available, but if you are considering buying a house in Spain because you live and work here, or because you simply want to invest in real estate in Spain, you may want to consider taking out a mortgage with a Spanish Bank. Whether you want to buy a finca in Spain, a holiday apartment on the Costa Blanca or a new home in Spain, taking out a Spanish mortgage may be the right solution for you.

Interest rates in Spain vary, but are generally much lower than in the UK, and competition between Spanish banks is fierce. If you are interested in a property still to be built, you may find that the constructors already have an agreement with a certain Spanish bank for all mortgages and you are left with little choice. If not, you would be wise to shop around for the best deal.

Don't accept the first offer. Ask for a copy of one bank's offer and then take it to a different bank to see if they can improve the offer - they often will. Then take the improved offer back to the original bank - you may get a pleasant surprise!!

You will be expected to prove ability to pay (i.e. wage slips from the last 3 months and bank statements of the last 6 months or, if you are self-employed, copies of your last 3 years accounts (with an auditor's stamp) and copies of you last 12 month's business bank statements and your last 6 months personal bank statements). Proof of payment based on your ability to pay with income received from renting the property will not be taken into account by Spanish banks. See our full list documents necessary to apply for a mortgage with a Spanish bank for residents and non-residents.

	Non-resident buyers		Buyers with Spanish residence permit
A copy of your passport Marital status, age, children etc. (married couples applying for a mortgage should provide information about both spouses) Your last three salary pay statements or pension vouchers The last tax declaration made in your home country (P-60) If you are an employer or are self-employed, a copy of your tax returns and annual accounts for the last two fiscal years Information about other properties owned fully or partly Details of the property you are planning to buy A brief description of current job situation, other incomes, investments, debts and other properties whether abroad or in Spain, etc. Information about any other sources of income		Copy of the residence permit Marital status, age, children etc. (married couples applying for a mortgage should provide information about both spouses) Your last three salary pay statements or pension vouchers Details of the property you are going to buy ("Nota Simple") Copy of your last tax declaration Photocopy of the last IBI bill Information about any other owned property Information about any other debts Infformation about any other sources of income Annual accounts for the last two fiscal years (if employer or self-employed)

If you are not a legal resident in this country, then you may be asked to provide an aval. This will be somebody usually based in Spain who agrees to pay in the event of you being unable to. You will also be required to have a NIE (Número de Identificación para Extranjeros) which is like an ID number everyone needs (residents and non-residents) in order to buy or sell property in Spain.

Most Spanish banks currently offer mortgages of 60-80% property price over 5, 10, 15 or 20 years depending on whether you are a resident here or not. Some banks offer 100%. The current variable rate is about 4.7% and there is usually an early write-off fee of around 1%.

Liabilities should not exceed 35% of your net monthly income. Banks use the following variables to determine your ability to pay off the mortgage:

• Existing liabilities (existing loans or mortgages, monthly maintenance agreements...)
• Future liabilities including the proposed loan
• Present income and investments.

Revaluation of property in Spain

The Costa del Sol is still one of the areas which offers investors in property the best return. According to the latest studies, people who invest in property on the Costa del Sol can still expect excellent value for money - 10% more than the average return on property in Spain. According to these figures, people investing in property on Spain's other coasts - Costa Brava, Costa Cálida y Costa del Azahar - can also afford to be optimistic.

Another interesting statistic is that prices of property in coastal areas are still much lower than prices in the major Spanish metropolitan areas (Madrid, Barcelona, San Sebastian...). So much so that properties in capitals of provinces like Cadiz or Castellon costs half the price of property in other capitals.

Nevertheless, experts advise caution, because the property market in Spain is no longer the easy option. Buyers are advised to study the area they are considering buying property first before purchasing. The past few years have witnessed an unprecedented boom in the construction industry and some coastal areas, subject to speculation, already have a surplus of new and second-hand property.

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