Frequently Asked Questions
This section is dedicated to the most common questions we are asked by our clients about moving to Spain or arranging a Mortgage in Spain
80% of the Spanish bank valuation is available, 70% of valuation is standard.
Yes but only with dual UK and Spanish borrowings or a significant valuation above purchase price. Any UK mortgage will need to be secured against an asset in the UK.
Yes
Yes
Yes up to 75% including an interest only option.
If you own the plot of land outright with no debts and have a fully approved project the banks in Spain can provide a construction mortgage. Most banks in Spain will provide finance up to 60% of the valuation company estimate of resale value at completion. This loan in Spain can be released in stages as the build progresses. A few banks in Spain will provide a Spanish mortgage for the land at 50% loan to value and then cover up to 70% of the actual construction costs.
You will need to allow for the Spanish banks mortgage opening fee, valuation fees, Notary and registry fees and mortgage deed tax. All costs are quoted in writing before you proceed. Some costs like the Spanish bank opening fee and valuation costs will be specific to the mortgage lender in Spain selected. All registry, notary and tax costs will apply whichever bank in Spain is selected. You should allow 12% of the property purchase price to cover all purchase and finance costs that will be due. You should not decide whether to take your finance for your property in Spain from Spain or the UK until you understand the relative set up costs in full.
Yes but all set up costs of the new Spanish mortgage will apply. In Spain under the current legal process a Spanish mortgage is related to a specific Spanish property not the person. This means the mortgage sits with property not the individual. You cannot port your existing Spanish mortgage to a new property but you could subrogate the existing mortgage to a new owner. To make changes, other than value, to your Spanish mortgage necessitates the existing mortgage being closed down. Further taxes and Notary costs may be prohibitive.
Realistically 4-8 weeks depending on complexity of case.
Approximately a week to 10 days.
No, but we do occasionally experience a valuation that does not meet the market value. This can be driven by a number of factors, including non-registration of full square meter age on the Nota Simple or restrictions placed on the valuation company by their regulatory body.
IMS can legitimately obtain up to 65% of valuation by an IMS recommendation and a self-certification basis. All other cases where client's finances are complex or for self-employed clients that may not show full income on tax returns we can deal with by professional packaging without reverting to self-certification. We will not create false documentation in order to obtain a mortgage in Spain.
IMS will update you by phone, email or fax at key stages in the mortgage application process and will provide a courtesy update at least once a week.
If you are experiencing any difficulties with payments you should talk to your bank in Spain immediately. If you do not communicate with them the bank in Spain will start legal action usually after 3 months. Under the Spanish legal system the bank in Spain must apply to the courts to take full possession of your property unlike the UK where a lender just secures through the court the right to sell your property to cover their debt. Because this process takes longer the bank in Spain is likely to take action earlier than their counterparts in the UK.
For all initial guidance on level of Spanish and total mortgage borrowing; written mortgage product quotes and general information there is no charge. If and only if you instruct us to submit a mortgage application on your behalf do we apply a fee. This fee is a flat rate of £ 650 for standard Spanish residential mortgages. All Spanish bank fees, tax and registry costs related to the Spanish mortgage will be provided in writing.
In general most banks in Spain like to see the mortgage completed by the time the applicant is age 70. We can get terms up to 40 years. For older clients this may be a maximum of 20 years but we can obtain Spanish mortgages for clients up to age 80. For clients falling outside this UK lending against an UK asset may be possible as an alternative financing option.
Yes but only through UK equity release for the Costa del Sol region. It may be possible in other areas of Spain with certain developments to arrange finance in Spain at private purchase contract stage to assist with staged payments.
No we can obtain up to 80% of valuation but it may limit the banks in Spain we can recommend if the declared property value is below the level of mortgage required. Most banks in Spain will lend as standard 70% of valuation with the mortgage not exceeding declared price; a few will lend above the declared price.
Yes for SL Companies terms up to 25 years can be arranged, for Offshore Companies this may be restricted to 15 years. In most cases the bank in Spain providing finance will expect the client to provide personal financial information. Some banks in Spain will insist on taking a pledge on the shares as well as securing against your Spanish property purchase.
Yes but the amount of Spanish lenders that will accept this property ownership structure is limited and the Company must be able to produce the stamp of the Hague Apostille. Clients should also be aware they may have tax issues in the UK if they buy through their UK Company and should discuss this ownership structure with their tax adviser before committing themselves.
Most Spanish banks expect the client to have a current bank account with them and buildings insurance is a legal requirement. All other products can be avoided unless you wish to take them. Attractive headline interest rates can have compulsory products tied to them and the full cost of all products should be considered when assessing the mortgage against the mortgage of another bank in Spain.
Currently the banks in Spain are under no obligation to register your debt in the UK. The mortgage in Spain will not show on your credit file in the UK.
For all urbanized purchases in Spain, the Spanish bank will be happy to lend. If you buy a property in Spain sitting on rustic land the amount of banks in Spain willing to use the property as security will diminish. Spanish properties on rustic land are unlikely to reach the valuation levels of similar properties in urbanized areas. Cave houses which are very popular in some parts are difficult to finance in Spain.
In general most banks in Spain assess your net not gross income and relate it to the actual monthly mortgage payments level. For most Spanish lenders your monthly mortgage payments in Spain should not exceed 1/3rd of your proven income minus tax and existing UK liabilities. Each bank in Spain will have a slightly different view on how they underwrite and what papers they need to see. Some banks in Spain will provide mortgages in Spain with income ratios up to 45%. For Spanish mortgage products providing higher income ratios you can expect to pay an extra margin above Euribor. There are a few banks in Spain that will not ask to see the level of existing borrowing in the UK.
No Spanish banks are not obligated to provide you with and operate under the regulation as laid out by the FSA. It is therefore extremely important you deal with an expert who can inform you in full of the drawbacks and benefits of financing in Spain.
Not all banks in Spain provide a written formal offer of lending as standard. Where this is the case we at IMS insist on the terms in writing from your Spanish lender before completion which we will forward to you and your Lawyer in Spain to check and agree.
Just before, at or shortly after completion the bank in Spain that your mortgage in Spain is secured with will contact you and provide you with your Spanish bank account details, date that Spanish mortgage payment has to be made and details of any other services. It will take approximately 3 months for your Spanish purchase and your Spanish mortgage deed to be registered in your name. Once your purchase in Spain and your Spanish mortgage is registered any residue funds taken as a provision from the gross mortgage funds will be returned to your Spanish bank account and a pack including your title deeds and invoices outlining all costs and taxes paid will be available to you. If you have not had any communication from your lender in Spain within 4 weeks of completion please call us.
All banks in Spain are made liable by the Spanish government (where a Spanish mortgage is taken to complete on a purchase in Spain), to hold back from your gross loan sufficient funds to pay:
Mortgage deed tax Notary and registry fees for both Spanish purchase deed and Spanish mortgage deed Retain the sellers 5% tax obligation ( deducted from sale price) Purchase stamp duty (new properties only)
The bank in Spain will estimate the cost of the legal and tax requirements and will take a provision of funds from your advance to cover these. Most banks in Spain will take more funds than the average costs will be as the banks in Spain prefer to rebate monies back to you rather than have to take further funds from you at a later date. Once all parties have been paid in relation to your Spanish mortgage deed and purchase deed a copy of all invoices should be sent to you and residue funds paid back direct to your Spanish bank account. Apart from the mortgage deed tax and registry costs relating specifically to your Spanish mortgage all other costs retained by the bank in Spain are payable whether you have a mortgage in Spain or not, The bank in Spain acts purely as a collector of these fees on behalf of the Spanish tax and legal system.
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