There is a wide selection of Spanish lenders keen to provide mortgages to British people buying in Spain. Mortgage rates are more expensive than they were, although they are still affordable for many buyers. They have increased in line with the European Central Bank rises.
With around 300,000 British people living in Spain and so many more keen to move there, the lenders are eager to provide Spanish mortgages.
- Mortgage types: There are two main types of mortgages in Spain: fixed-rate and variable-rate mortgages. With a fixed-rate mortgage, the interest rate stays the same for the life of the loan, while a variable-rate mortgage has an interest rate that fluctuates based on market conditions.
- Loan-to-value ratio: The maximum loan-to-value ratio (LTV) in Spain is typically around 80%, meaning you can borrow up to 30% of the property’s value. However, some lenders may offer higher LTVs, especially if you want a larger mortgage loan.
- Interest rates: Interest rates in Spain vary depending on the lender, the type of mortgage, and the borrower’s creditworthiness. As of 2023, interest rates for fixed-rate mortgages are around 4-5%, while variable-rate mortgages are about 4%.
- Fees: In addition to interest rates, there are several other fees associated with Spanish mortgages, including appraisal fees, notary fees, registration fees, and mortgage arrangement fees.
- Mortgage term: Mortgages in Spain typically have terms of 15-30 years, although some lenders may offer shorter or longer terms.
- Requirements: To qualify for a mortgage in Spain, you will typically need to provide proof of income and employment and a credit report. You must also provide documentation on the property you intend to purchase, including the purchase contract and property title.
- Repayment options: Spanish mortgages generally offer two repayment options: capital repayment, where you pay both the principal and interest each month, or interest-only, where you only pay the interest and the principal is paid at the end of the loan term.
- Exit penalties: Some Spanish mortgages may have prepayment penalties if you pay off the loan early or make additional payments. Be sure to check with your lender to see if this applies to your mortgage.
- Legal considerations: Working with a reputable lawyer or legal professional is essential when buying a property in Spain. They can help you navigate the legal requirements and ensure everything is in order before signing any contracts or agreements.
- Is buying in Spain safe? Spain has a very secure property purchase system using ‘seller reservation agreements’. Once you decide to buy a property and a price is agreed you will have to enter into an ARRAS contract. You typically put down a 10% deposit and arrange to complete within two months. Unlike the UK system, if the seller pulls out, they have to give you double the ARRAS amount back.
Aaron Strutt from yourspanishmortgage.co.uk says: “Buying a property in Spain can be a complex process, but with the proper guidance and support, it can be a rewarding investment for the future. More of the people we are speaking to want to move out of the UK, and they want to understand how much they can borrow and how much a Spanish mortgage will cost.”
Do you need a Spanish mortgage? Contact yourspanishmortgage.co.uk for expert advice
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