CHARGES TAXES & EXPENSES FOR PROPERTY > 8.Mortgages
Mortgages There are virtually no exchange controls in Spain and you are therefore free to obtain a mortgage on your property in any currency and from any bank in the world. We would, however, strongly advise you to set up your mortgage in euros since this will protect you against running into problems due to currency fluctuations. You will find that Spanish banks offer some of the lowest interest rates in Europe (under 5%) and are happy to lend to non-resident property purchasers. Like most aspects of property purchase in Spain your lawyer can arrange a mortgage for you.
The amount you can borrow will obviously depend on the value of your property. As a general guideline, non-residents can borrow up to between 60% and 70% of the property value, while for residents this figure rises to 80% of the value. It will also depend on your income. As a rule, banks will usually lend up to three times your gross annual income, but they rarely authorise a loan that will result in monthly repayments that exceed 33% of your net disposable income per month.
The maximum term for repayment of the loan is usually 15 years, but mortgages can sometimes be arranged that have 25-year terms. The crucial factor here is the age of the borrower. The borrower, or eldest partner in the case of a joint mortgage, must be under 70 at the end of the mortgage term. So, if the eldest partner in a couple is 55 the maximum repayment term a bank will be prepared to offer is 15 years.
Each bank requires slightly different documentation for a mortgage application, but the following is a general guide to the kind of paperwork you will be expected to supply.
For employed mortgage applicants:
your last three wage slips & latest income tax return or evidence of your most recent tax assessment
copies of your current bank account statements for the last six months
a letter of reference from your employer confirming the dates of your employment and salary
a copy of your passport or residence permit if you are a resident