How does a Spanish mortgage work?

By Vivi Real Estate | 14 de March de 2022 |

Wondering how you can take out a Spanish mortgage as a resident or non-resident? How much you can borrow for you modern apartment or luxury villa and and what kind of documents can be requested? Did you know that non-residents can borrow up to 70%? Below we explain everything in detail together with the most frequently asked questions from our customers!

How much can I borrow?

The maximum loan for non-residents in Spain is 70%. The rest of the sum, including fees and taxes is out of pocket. This percentage depends on the transaction and the bank. Professional teams can assure foreign buyers that notaries and land registrars will help them.

How will my mortgage be approved?

The debt to income ratio in Spain is between 30% and 40%, this includes all existing debts and the new loan you are applying for. The banks will carry out a risk assessment and confirm the approval of the mortgage subject to the valuation of the property.

Once the offer has been accepted, a bank account will be opened and an application for the valuation submitted. Together with the mortgage, an insurance offer will be submitted, which is usually provided by the same bank that will provide the mortgage.

What documents may be required?
ID card
Income tax return
Account movements for the last 3-6 months
Sale deed
Last 3 paid receipts for all loans and credit cards
Paid receipt of current year’s tax (IBI urbana) if you already own a property

3 most recent salary slips from each of the applicants
Employment contract of the applicant

Quarterly income tax returns (last 4)
Quarterly VAT declarations (last 4)

When will I know how much everything costs?

Once everything is in order and after the details have been confirmed with the bank and the solicitor, the mortgage broker will send you a cost statement, listing the various costs and taxes associated with your purchase, which are generally 10% – 15% of the total purchase price. At this point you will also know the exact amount you will have to pay for the rest of your purchase.

What does the mortgage broker do at the notary?

You will have to go to the notary twice within a period of 10 days. At the first meeting with the notary, you will have to take a test with questions and conditions of the mortgage. The test is in Spanish but the notary will prepare you, after the test you will go to the notary for the second time for completion. Once completion takes place, two deeds will be signed (witnessed by a notary) the mortgage deed and the purchase deed. Payment is made by bank draft.

If you are curious to know more about the total buying process click here for more information.

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