he mortgages the property in Spain is a common source to access a property. Buying a property in Spain is a daunting task due to high property prices unless you have enough saving to deal with the whole payment. It is necessary to apply for a loan or credit that will normally be secured by a mortgage on the purchase of a property.
ü Need to choose a bank for mortgage
ü Personalized information file (Ficha de Informacion Personalizada FIPER)
ü Provide the source of provision of funds
ü In case of already committed to a bank, property to be valued report from an appraisal company
ü Binding offer (Oferta vinculante) issued by the bank
ü Signing a deed before notary
Note: It is advisable to hire an administrative manager to look after the whole process in this regard.
You have to bear some extra expenses to mortgage a property in Spain. Common expenses in this regard are stated as under.
ü Mortgage taxes
ü Land Registry
ü Appraisal of Property Fee
ü Administrative Management Fee
ü Insurance Fee
ü Bank Processing fee
Besides this all, you must keep an eye on the following factors too if you decided to mortgage a property in Spain.
The interest rate is the ‘price’ charged by banks for giving a loan. This interest is calculated on a percentage or rate on the outstanding amount. Banks in Spain are free to set the interest rate they wish, although they tend to reduce it if the mortgage has good guarantees (for example, being on the primary residence) and if the amount is less than the value of the mortgaged property. The interest rate may be fixed or variable, as is held constant or not over the life of the mortgage.
Usually, banks in Spain can grant mortgages in Spain up to 80% of the appraised value of the property. However, this can be variable because of various factors like the adoption of additional guarantees, your financial capacity, whether it is the primary residence or other financial debts.
In case you choose a variable rate for the mortgage a property in Spain, you should be extra cautious and ask for a lower amount, which allows your borrowing capacity, since a rising on interest rates may cause an increase in periodic installments in the future.
The Terms and Conditions for Mortgage
It is very difficult to obtain a mortgage in Spain if you have already crossed or nearby the age of retirement.
For the larger amount of money, the repayment term of mortgages in Spain is usually for a long period of time. In some cases, it may reach the limits of over 40 years.
In addition, you should consider whether you are interested in mortgages that are offering more favorable interest rate, in return for your engagement to the bank, in the form of insurances (home, to guarantee payment in case of death or long-term unemployment, permanent disability, etc.) and some other products.