The mortgage system in Spain works like most other places in the world and mortgages are available for residents and non residents alike. Important points to note are as follows :
- The amount of money to be lent will be based on the bank valuation of the property. If you are non resident, then the banks will typically lend up to 70% of their valuation, for residents this rises to 85%. The currency for a Spanish mortgage is the Euro.
- Proof of income and identity will be required.
- The title deeds for a property(the escritura) will remain with the lender until the mortgage is repaid.
- Mortgage terms range from 15 to 30 years with 20 years being a typical term.
- Mortgages are based on repaying the interest only and typically are based on the Euribor rate plus a percentage. This usually means that the mortgage rate in Spain is much lower than that in the UK for example.
- You should budget for approximately 10% of the purchase price as the cost of buying a property. This is made up 7% Purchase Tax, notary fees, solicitor fees and valuation fees. This amount is in addition to the purchase price and hence should be allowed for when finalising your budget for purchasing a property.
When you have found the property you wish to buy, it is normal to put a deposit down to ensure that the seller does not attempt to sell to another party. The deposit is normally 10% and is not usually refundable unless you instruct your lawyer to apply conditions of sale with the vendor.