Many people say today that one cannot get

mortgage loans any more from banks in

Spain. We have helped several of our clients

in the recent past to find financing.

IMPORTANT ABOUT FINANCING

Many people say today that one cannot get

mortgage loans any more from banks in

Spain. We have helped several of our clients

In the recent past to find financing.

Before going to Spain to search for properties you should read this text, as you otherwise easily can lose a lot of time and money, apart from being disappointed too.

Many Spanish banks, especially the savings banks “Cajas de Ahorro”, exposed themselves heavily on the mortgage market during the years 2003 – 2008. Today, they are trying to cope with the situation of a lot of reposessed properties and are not interested in giving new mortgages.

Other banks did not lend a lot during the property-boom and are still interested in setting up mortgage loans.

Their currently normal requirements in order to approve to a mortgage application are the following ones:

.    That you have savings enough high to enable you to pay to your account in the bank where the mortgage application is presented an amount in the region of 40% of the lowest value between the bank evaluation and the declared value to be put on the deeds (residential property for not permanent use = vacation-home) . Thereto, you must also have money to defray of the purchase and the mortgage costs, which normally add up to some 10% of the purchase price.

In other words, the total amount that you need to use of your own savings normally corresponds to 50% of the purchase price.

In other words, for a property which bank evaluation and also price to be declared on the deeds corresponds to 100.000 €, the minimum amount cash that you must have available corresponds to some 50.000 €.

The second requirement is that your monthly disposable income after debt payments, including other mortgage commitments in your home country and also after deduction of income tax, is at least 3 times the monthly amount the repayment of capital and interest for the loan that you apply for will cost.

In order to come prepared to Spain you should bring with you your last tax-return and 3 pay slips. If you are self employed you should, apart from the last tax-return, bring a statement from your accountant regarding your income during the 3 last months.

Basic current (Dec 2010) lending conditions.

The current interest rates on Euribor + 1,25% to 1,75% (depending on the bank). This implies (middle of 2011) a yearly mortgage interest in the region of minimum 4%.

The interest is normally set on a variable basis, which means that it is fixed for periods of either 6 or 12 months.

The period for the loan is usually calculated on the basis of how many years you have left to your 70^th birthday.

Early repayment of capital is normally charged with 1%.

You are welcome to contact us should you want to know how much a certain loan could cost to pay back on a monthly basis.