• You may be in a position to purchase a home in Spain outright.
• Alternatively, you may decide to raise capital on your main residence in the UK or take out a mortgage with a British bank. The Halifax, for instance, is now offering loans for Spanish property purchase.
• A third option is to take out a mortgage with a Spanish bank or Caja de Ahorros (similar to our building societies). These institutions are increasingly open to lending to non-residents and it is worth going to two or three in order to compare rates and offers

Taking out a mortgage in Spain

Spanish banks base their lending rate on the EURIBOR (the European base rate). The EURIBOR rate is currently 2.88. The mortgage interest rate may be between 1-2 above EURIBOR for the first year and 2 -2.5 thereafter. These rates are quite low and with favourable capital growth returns and rental potential, this would seem a good time to buy.

Mortgages Requirements

• Minimum age : 25 years old
• Have a full-time job or have been self-employed for three years or more. Proof of income will be required.
• Maximum entitlement : around 2.5 times your gross annual income. The rental potential of the property will not be taken into account.
• As a non-resident, the maximum you can normally borrow is up to 70% of the purchase price. Some banks are disregarding this and offering up to 80% but it is not easy to obtain this amount
• Repayment period : 5 to 25 years normally. Mortgages must be fully repaid by the age of 70.
• If you rent out your property, the interest on the mortgage will be tax deductible.

What will it cost?

The cost of taking out a mortgage will be approximately 3% of the purchase price. Fees and charges are as follows :

• Property valuation
• Land Registry fee
• Notary fee
• Stamp Duty
• Lenders arrangement fee
• Life Insurance
• Buildings Insurance

What documentation will I need?

1. Photocopy of passport
2. For an employed person
   • latest pay slips
   • P60
   • if you have another loan, 2 latest proofs of repayment
   • bank reference.
3. For a self-employed person
   • chartered accountant’s reference or tax assessment from the Inland Revenue
   • if you have another loan, 2 latest proofs of repayment
   • bank reference.