All Spanish banks provide mortgages and are quite happy to do so. It pays to shop around for a mortgage as interest rates and terms vary considerably depending on the bank, the amount and the period of time. You can, of course get a mortgage from a UK Bank or Building Society but it is easier and quicker to use a Spanish source and or a Mortgage Broker. The web site www.inspain.tv/Mortgages.aspx has a range of Mortgages available.
Mortgages Fees - The fee for the valuation is approximately 300 euros but obviously varies according to the size of the property. A search must also be made in the Land Register and a certificate issued for the corresponding entry to check on the possible existence of other mortgages or loans made against the property. If the home you are buying is still under construction, the builder may require the cost of the property to be paid in a series of payments. Most lenders can provide a mortgage that matches these requirements subject to certain safeguards.
Financial institutions will offer you a choice of Mortgage Products which usually include:
Interest Only Mortgage whereby you only pay interest to your lender throughout the mortgage term and your mortgage balance doesn't reduce. At the same time, you put money into a separate investment which should grow and pay off the mortgage at the end of the term. With this type of mortgage, it is your responsibility to make sure an appropriate investment is taken out and maintained so that the funds are available to pay off the mortgage by the end of the term.
Endowment Mortgage - whereby every month or quarter you make two separate payments, one for the interest on the loan, the other for the premium on the endowment policy.
Capital Repayment Mortgage - whereby you make either monthly or quarterly payments of interest and capital on the mortgage.
During the early years, each monthly payment comprises mainly of interest. In later years, more of the capital is paid off.
You will generally be given a period of up to 20 years to repay your mortgage and it is your responsibility to ensure that you have a suitable mortgage protection policy to repay the loan if you die before the end of the mortgage term (often a bank will require you to take out a mortgage protection policy).
You should also budget for taxes and fees when raising a mortgage. In general, you can expect to pay approximately 3% percent of the property purchase price in associated taxes and fees.
Gary Smith is a father of three children and lives in Spain. Gary regularly writes for the Spanish Property Experts http://www.inSpain.tv . He has lived in Spain for a number of years and his articles provide an insight into expatriate life in Spain.
