expats in Spain
With decades of experience, building up a network of contacts and relationships with leading banks, we can provide expert advice in Mortgage, Insurance & Tax matters.
To buy a property in Spain as a Holiday Home, or as a more Permanent base we have the knowledge to help you get finance in place and ensure you have everything sorted from a legal, tax and regulation point of view.
How much can you borrow with a Spanish mortgage?
Loan to Value Spanish banks will lend to foreign nationals and the maximum loan to value is 70%.
If the applicant can demonstrate paying taxes in Spain ( so a Spanish tax resident ) then most banks can lend up to 80%
What costs should I budget for?
The following is an example:
- Taxes 10%
- Stamp Duty 0.5 > 2%
- Solicitor >1%
- Notary >0.5%
- Mortgage >1.5%
- Valuation >€800 approx (dependent on value)
As a safe guide you are best to budget around 15% in costs associated with purchasing in Spain.
Example: A €100,000 property you can expect to pay in the region of €15,000 in fees.
How does affordability get calculated?
Spanish banks work differently to UK lenders. A Spanish bank looks at the net income as the measure by which all borrowings including loans and car loans should be supported.
Typically a Spanish bank will calculate this to be no more than 1/3 of the net income ( after tax and social insurance)
Mr Tandy – Gross income is £85,000 net is £53,125 after tax, social & pension deductions. This provides take net home monthly pay of £4,427
Of this £4,427 around £1,460 (1/3) can be used in support of the new Spanish mortgage payments, but it also must support any other loans such as a UK mortgage or unsecure loans.
To provide a reference point-
€150,000 at 2.5% over 25 years = €680 pcm*
*The above does not include insurances or other related costs.
Can you access 100% lending?
No banks will offer 100% financing to foreign reisdents. As a bespoke UK/ Spain / EU broker, we can do a combination of lending to secure 100% financing example:
Spanish Property Worth €200,000 + 15% costs total: €230,000
UK property – worth £500,000 with £200,000 mortgage Equity within it of £300,000
Borrow 50% off the equity in the UK £150,000 converts to €172,500
Borrow the remaining €57,500 from the Spanish bank which would be a low 28% LTV.
Only a regulated UK licensed broker can help with the possible scenario above.
What is the oldest you can take a Spanish mortgage to?
Banks generally permit a repayment term up to age 75, however we have relationships with some banks that will permit a mortgage up to age 80 at term end.
There may be a requirement for an affordability assessment of your proposed income past retirement age.
What interest rates can I expect to pay?
A difficult question to answer, rates range from 0.9% above Euribor to 4.8% it really depends on the bank, the loan to value and the calibre of the client to some extent.
To be safe somewhere in the middle is best to budget for. However as a specialist broker we look to secure the best possible deal.
What banks do you work with?
Why should I use a broker?
It is difficult to deal with Spanish banks, especially if you don’t speak Spanish, or in deed if you are not sure how to navigate the purchase process. In addition you will need to open a bank account an have an NIE number, we can assist with all of the steps well in advance of your planned purchase.
An FCA regulated broker can also secure you the best deals by searching the market and price comparing with other banks. Ultimately you will get a better deal than going it alone. We are also UK regulated and while Spanish mortgages are not regulated, we still follow the UK best practices to ensure you have a good level of consumer protection and advice.
A broker will also organise all the paperwork and can screen the documents to ensure the bank are getting what they need. We provide only the relevant information to the Spanish bank, in practice we have seen sometimes too much information is not a good thing!
What documents will I need?
It is much the same process and requirement of documents as the UK mortgage process. Usually we require
- Address verification
- Income verification employed or self employed
- Credit report
- Wealth statement Assets Versus Liabilities
- Tax Ref number
- Overview of commitments
What are the advantages of a Spanish mortgage?
Aside from the obvious advantage of not having to use you own hard earned savings, you may be able to benefit from a reduced tax bill, either from an inheritance tax or rental income tax liability.
In addition with the stronger Euro and weaker Sterling, getting a Euro mortgage may reduce exchange rate risks. A mortgage may give you the ability to up your budget to a better or bigger property too, one that the whole family may enjoy!
What about Brexit & buying in Spain ? No-one is able to predict the legal outcomes from Brexit. However buying in Spain has always been a popular investment and lifestyle choice that was popular in the 1970’s prior to the formation of the EU and throughout EU membership, so we don’t believe this will change Pre or Post Brexit.
In fact many buyers want to secure a property prior to Brexit in order to get into Spanish Property Ownership prior to any residency or tax changes that may come post Brexit.
Additionally we are see-ing an increase in enquiries and general building in Spain from Major Builders & Developers such as TaylorWimpey / PrimeInvest / Kronos. We believe now is the time to secure your dream home abroad.
What about renting out my property for holiday income?
Spain has a fantastic holiday rental income yield, you can expect between 8-15% gross return dependent on area and facilities. We can guide on the best areas and properties to invest for this revenue stream.
Be aware that there are extra government legalities to complete when renting for holiday let income.
We can give advice on this and other tax related matters.
You can call us 7 days a week
for mortgage advice and information