Mortgages on Costa del Sol Properties.
Mortgages are available for all types of property and land on Costa del Sol. 
Who offers mortgages ?
Mortgages are available from most of the major Spanish banks and savings banks [Caja], International banks and lenders in Gibraltar.
Many new apartments, townhouses and villas under construction on the Costa del Sol are already mortgaged by the developer as a means to raise capital to fund the construction and or for the convenience of the purchaser.
A purchaser can take over such a mortgage when purchasing such a property and by negotiation with the bank holding the mortgage increase the amount of the mortgage loan inline with the increased value over the construction period.
This is probably the cheapest way for an individual to obtain a mortgage, as the setup costs will have already been paid by the developer.
Sometimes resale properties are also offered for sale with a mortgage in place, an Independent Mortgage Broker and your abogado should check out the terms and conditions applying to the existing mortgage loan before you consider taking it over.
Important Note:   Mortgages in Spain are attached to the property, not to the person who takes out the mortgage loan and are written into the escritura [Title Deed] of a property, which is just one of many good reasons why you should always use an independent abogado [Spanish lawyer] when purchasing.
For more information see Costa del Sol Property Buyers Guide

What types of Mortgages are available:
Repayment: Some lenders offer lower start-up interest rates, or interest only for a period. Interest only: Ideally suited for those who wish to keep outgoings down, funding new construction or equity release. The majority of banks will no longer offer interest only to non residents.

Which lender should I choose?
Spanish national and regional banks are generally the best option, but because of the many variables that need to be considered, not least being the location and type of property, banks current special offers, and the terms and conditions offered, to get the best deal available you will need some professional help.
As part of the free service we provide for our clients we provide a Qualified
Independent Mortgage Advisor who is able to advise you on the most suitable mortgage lender for your situation, bringing the mortgage on your Spanish or UK property to a successful conclusion.

Some, but not all banks pay mortgage brokers a commission for introducing mortgage clients.
The bank charges to you will be the same, whether you do all the work yourself or use the services of an independent mortgage advisor.
Mortgage advisors charge an admin fee or a percentage commission, but they will have access to all lenders and in most cases will find you a better deal than you can find on your own.

What is the cost of arranging a mortgage?  
Unless you are purchasing a property with a mortgage already in place [see above] the cost to arrange a new mortgage will around 4.7% of the loan.
It is expensive to swap mortgages, so best to choose the right one in the first place.

Apart from the valuation fee from around 300 euro, banks usually charge 1% setup fee, the government will charge you 2% stamp duty [1% of the loan + 1% of the total accrued interest], Mortgage broker 1%, then you will have to pay legal fees, notary costs and registration, these should all be itimised on your mortgage offer, and they will be paid by the bank on your behalf from funds you provide.
The banks abogado will be looking after the bank interests, so you should use your own abogado to look after yours.

You may be required to take out building insurance and possibly life insurance to cover the amount of the mortgage loan, you can take either straight life insurance, or an endowment style policy with the appropriate life insurance attached, which will give you a cash lump sum when the policy matures.

How much can I borrow?
Non residents: As a general guide will be able to borrow up to 70% of the banks valuation of a property, or the purchase price, whichever is the lower.
Higher percentages are available in some cases.

Residents: As a general guide can borrow up to 80% of the banks valuation, or the purchase price, whichever is the lower.
Higher percentages are available in some cases.

The key to obtaining the maximum mortgage offer, is in achieving the maximum valuation which is acceptable to the bank, which is the job of the Tasador [licensed valuer]
There are independent tasadors, some banks will accept valuations from a variety of companies, others have their own tasador, but the resulting valuations can vary considerably, an Independent Mortgage Advisor is invaluable if you wish to achieve the maximum loan at the lowest rates.

Your Income:
You can borrow up to 3 times your gross annual income, but generally the monthly repayment should not exceed 30% of your net disposable income.
On freehold commercial premises 60% is generally available.
On purchases of land the maximum will generally be around 60% of the valuation, which also applies to county houses constructed on land classified as "rustic"

On land which you own outright, an approved architects project, with the building license paid, can be mortgaged at up to 60% of the valuation of the completed project [construction and land].
This figure is more than sufficient to cover 100% of the building costs of normal residential construction.
Lenders generally will not finance construction on land that already has a mortgage attached, but a new loan can be made for the land and licensed project, canceling the original loan.

How much do I need to put down?
Ideally 20% to 30% of the purchase price, plus the purchase costs which are approx 10% of the purchase price, plus 4.7% of the loan.
However 15% down is possible in some situations.

Which Currency should I borrow in?
Mortgages are available in all major currencies. You should be aware that if you borrow in a currency which does not have a fixed value against the euro, currency fluctuations could make your borrowing more expensive, or less expensive depending on whether your chosen currency weakens or strengthens against the euro.

What Interest rate will I pay?
Interest rates will again depend on the currency you choose to borrow. Interest rates for mortgages in euros are based on the Euro Interbank Offered Rate, or EURIBOR for short, which has largely taken over from the older MIBOR.
To see current EURIBOR rates click on Euribor
The lenders rate will be a margin over EURIBOR generally EURIBOR + 0.5% to 1.5% but individuals circumstances can dictate higher or lower rates.
Now that the Euribor is very low, some banks have a mininum interest rate of 4% to 5%
Some lenders offer a lower start up interest rates of for the first year or interest only period or interest only, mortgages ideally suited for funding new construction or equity release.

How often will interest rates be reviewed?
Usually once a year
What is the maximum repayment period?
Most commonly 10, 15 or 20 years, but up to 35 years can be arranged
What will the repayments be?

What is the cost of early repayment of the mortgage?
From zero to 1% depending on the terms of the loan, some lenders only charge for cancellation only in the first 5 years, others make no charge at all, it is important to choose the your lender carefully if you are considering an early repayment option.

What information will the bank require?
Banks vary in the amount of information that they will require, it is wise to prepare as much of the below as possible in advance, a credit report is also useful and can save time.
You can't have too much paperwork in Spain!
If you are employed:  
Last 3 wage / salary slips.
Last Income tax declaration [P-60 in the UK] or evidence of latest annual tax assessment.
Copies of current bank statements.
Bank reference letter from your employer confirming date of employment and proof of income. [not always essential but helpful, especially if you want to achieve the highest possible percentage]
Copy of passport / residencia
If you are self employed:  
Latest income tax declaration.
Copies of the accounts for the last 2 / 3 years
Chartered accountants company report, confirming your annual personal drawings from the company
Copy of your passport / residencia
Personal bank statements.
Bank reference letter
You will also need:
In relation to a specific property, the nota simple from the property registry, offer letter or sales purchase contract, we will provide the relevant documents.
NIE number from the local police station, which your lawyer can arrange.
You will also need to open a Spanish bank account, which we can also help you with.
Note:
Bank charges for maintaining an account, and commissions for transferring money vary considerably, some provide good online banking, which is useful to check if the bills have been paid in your absence and transferring funds.

Any questions?
Our Independent Mortgage Advisor has over 20 years experience in banking and financial services.
Having forged relationships with over 30 lending institutions, UK Banks, 30 Spanish banks, Gibraltar and other offshore Banks, he is able to apply high levels of service and efficiency to securing the finance requirements for our clients.

He offers a free consultation through which he will be able to source the most suitable and competitive financing arrangements for our clients individual circumstances.
Liaising directly with the lender, lawyer and valuation company to ensure a seamless service right up to completion.

He offers, Residential Mortgages, non Residential Mortgages.
Commercial, Project and Development Finance
Access to UK banks, Spanish Banks, Offshore Banks and Private Lenders
UK Mortgages provided through FSA regulated firm

If you need any information or have any questions please contact us.

This mortgage guide is published by the Costa del Sol Property Index S.L.
We are independent GIPE licensed consultants, please read this guide in conjunction with our comprehensive buyers guide to safely purchasing and the costs involved in purchasing, owning and selling a property in Spain.

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