Mortgages in Spain
How easy is it to get a mortgage in Spain ?
This is perhaps the question we are most often asked - and the hardest one to answer in general terms. The main reason why we set up this service in March 2001 was to make the whole process easier for people who are applying from the UK, want to have a UK contact person, and want to apply from home without having to submit to the whims and vagaries of Spanish bank branches. The simple answer to the question is: if your income is sufficient and meets our " affordability test ", if the valuation is OK, and if the nota simple shows that the building is registered as a " vivienda " and it was built in accordance with local planning rules, then the whole process is as easy as it is in the UK, and it should be easy to get an offer.
What types of property will you lend on ?
Properties must fulfil all legal requirements, and in particular they must be registered and have title deeds. We cannot order a valuation without a " nota simple " ( an extract from the property register which proves it is registered and shows any charges secured on the property ) and a copy of the purchase contract.
If you are buying a new property, it must be registered before we can carry out the valuation. It cannot be registered until it has been completed, the certificates for " fin de obra " ( completion of construction ) and " primer ocupación " ( first occupation ) have been issued, and the " division horizontal " ( splitting up the development into the individual units ) has been registered. Once registered, the nota simple will be available.
How long will you lend for, and is there any age limit ?
There is no minimum term. We normally lend for terms up to 15 years ( this is the " default " term in Spain, unlike the 25 years we have in UK ) - this is because the Spanish do not like to be burdened with long term debt. The Spanish mentality is that the cost of borrowing £ 100,000 over 15 years rather than over 25 years, will save a lot of money in repayments. However, a 20-year term is possible providing that the mortgage will be repaid before the age of 65.
We prefer mortgages to be repaid by the age of 65. However, we can lend up to age 70, but we will require a life policy to be assigned to us. We can use existing policies, providing these cover the amount and term of the mortgage. Otherwise, we can arrange a new policy for you. For other mortgages, unlike most Spanish banks, we do not insist on life cover being assigned.
There is more flexibility in the UK in lending to older people, so if age is an issue it may be worth considering a re-mortgage if you are retaining your UK property, and this is a possible option.
Can I let the property, and does it matter if I am resident or non-resident ?
Neither of these matters or makes any difference to the mortgage. They will however affect the taxes you may have to pay in Spain. If you are letting the property, we have a specially designed " holiday home " buildings and contents insurance package, which covers you for letting and gives you access to a helpline in the UK.
Are endowment or interest only loans available ?
No - all our loans are on a repayment basis - endowment or interest only loans are not available.
Can I repay the mortgage early ?
You can repay your mortgage at any time. Capital repayments up to 10% of the amount outstanding ( at the start of each year ) can be made each year without charge; above this, a 1% fee is charged on the amount being repaid ( so, on £ 10,000 this is £100 ).
How do I apply for a mortgage with Caja Duero ?
The first thing to do is complete our mortgage request form, and we will take it from there. We arrange everything either by telephone and post, or by e-mail.
How long does it take ?
The whole process takes around 5 to 6 weeks. There are ways in which this can be shortened if necessary.
In particular, we usually have to wait for the nota simple. So, it will help to speed things up if you can ask the estate agent or your lawyer to obtain this and send it to us as soon as possible.
Do I have to open a current account with Caja Duero ?
Yes - this is the only way the application can be processed, and the only way the mortgage can be repaid. But you can also use this account normally. You will be supplied with a debit card, which you can use wherever you would use a credit card, and in all the ATM's in Spain. You will also have access to our Internet banking service, which you can use to check your account (and if you become resident in Spain you can then use it to make transactions as well). If you can speak Spanish, you can also use the telephone banking service.
What about buildings and contents insurance ?
Caja Duero offers a very competitive combined buildings and insurance package. As an example, £ 40,000 of buildings and £ 10,000 of contents cover costs just £ 96 a year. This will be arranged automatically, so there is one less job for you to worry about. More information about our buildings and contents premiums is attached to this guide.
If you want to insure your contents through a UK company, we can arrange this for you too. Unlike Caja Duero's standard cover, this policy covers you for letting the property, and includes accidental damage cover ( excluding damage caused by tenants ).
If you choose not to finance the property with a mortgage from Caja Duero, we can still arrange the buildings & contents insurance for you. The cover is as above, so also covers you for letting.
What if I want to use the equity in my UK Property ?
If you prefer to raise the finance by re-mortgaging your UK property, we offer this facility in co-operation with Building Society colleagues.
If you are interested in this option, please contact us in the first instance; we will arrange for the Building Society to contact you. They will talk through the transaction with you to check that there will be no problems, and will then send you an information pack with relevant product brochures and a simplified application form. Everything can be arranged by telephone and post. |
