The Different Types Of Available Mortgage In Spain
Self Certification
Rural & Rustic Properties
60% Loan to Value Full Term Interest Only
70% Loan to value
80% Loan to value
100% Mortgages!!
This simply means that you present a document, that we can supply, to the lender that declares the income you earn net of tax per annum. With this document, copy of passport and NIE certificate, you will be able to obtain a maximum of 40% loan to Value. The lending is low due to the perceived risk to the lender and the set up fee will be 2% instead of the normal 1% - 1.5%. These product are, due to the credit crunch worldwide, becoming even more expensive and very hard to obtain.
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If the property you want to purchase is registered as 'rustic', then the borrowing is normally 50% - 70%loan to value. Land will always be 50% and will be charged at 16% IVA instead of the normal 7%.
Most rural properties are registered as being rustic and are normally stipulated as being fincas, cortijos or almacens. This means that the property is not generally used for human habitation but for livestock, used as a warehouse or the temporary shelter of farm workers. Some properties will not be registered at all. This is a common problem in the country as the 'locals' would generally build without a license to avoid the red tape. It would be up to the estate agent or your lawyer to confirm the registration status of any country property you wanted to buy. Borrowing would be possible on these properties as long as the registration took place at the Notary on or before completion. If the land is not registered then no borrowing would be possible for 2 years after registration.
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This is a new mortgage on the market in 2006 and geared towards investors buying off-plan property to rent when completed.
By purchasing off-plan in the early stages of a new development, the purchase price is usually much lower than the complete value. this increase could easily be up to 25% and maybe above. New developments generally want 20% - 30% down to complete the contract. With the expected increase in value on completion the remainder of the purchase price could be realised by mortgage.
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This is the normal mortgage available for non-residents. It comes with many features such as up to 10 years interest only, fixed rates and the standard capital repayment. For the interest only all income and ID documentation will be required including a credit report. If you are a UK resident this will be taken based on your UK registered address. In the UK, Experian or Equifax are the usual companies who supply this information and can be found on the internet.
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This is the highest possible borrowing level in Spain for non-residents and residents alike without serious charges and rates being mandatory. Standard capital repayment is normal although some lenders would be willing to offer the first year interest only, subject to status. All income and ID documentation will be required for this type of application along with an up to date credit report detailing the names of all applicants and any associated debt. In the UK, Experian or Equifax are the usual companies who supply this information and can be found on the internet.
A new lender to Spain is offering 80% loan to value, up to a maximum lending age of 75 years or 30 year term, 10 years interest only. Full documentation will be required including a credit report which will be arranged by the lender.
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In any publication in Spain you will see an advert for 100% mortgages. THEY DO NOT EXIST! 100% 'borrowing' will only be obtained when 80% of the valuation becomes 100% of the purchase price. This very rarely happens for non-residents and usually banks will require the non-resident purchaser to pay some cash funds towards the purchase. This in reality means that 85% or 90% of the purchase price could be achieved applies to residents in full time employment with full documentation and below the age of 30 years. This does however enable borrowing over 40 years.
There is a Spanish bank that will lend 100% of the valuation of the property. With a high valuation, the purchase price and all costs could be realized. This product is only available to residents, employed under contract, in Spain and below 35 years of age.
Another way of obtaining 100% 'borrowing' is for the mortgage broker to arrange equity released from your home country. This means that with both mortgages 100% of the purchase price has been achieved. it all comes down to manipulating the situation to fit the phrase!
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