Overseas Mortgages:More information on Buying in Spain

Mortgage Finder >Overseas Mortgages > Buying Spanish Property

Learn More About Buying Property in Spain...

More and more people are buying a second home, or settling in Spain today. And at NewMortgageFinder we can help you find the right mortgage for your Spanish property. We'll help you through the pitfalls of Spanish property buying. Read through our guide below before contacting us and taking that first step to your own Spanish home.

Choosing a mortgage

If you are thinking about buying a property in Southern Spain to use as a main residence, retirement home or a holiday property, we can help you every step of the way. When buying a property abroad it is important that you find the right lender. We can lend on properties located along the Costa del Sol, from Gibraltar to Motril.

When you're buying a new home it's important that you get the right advice and information. At New Mortgage Finder we subscribe to the Mortgage code and are regulated by the FSA. This means that when you talk to one of our Mortgage Advisers you can choose the level of service that meets your needs. The advice is given by trained qualified advisers. You must now however that the code does not apply to buying property and raising funds overseas.

Our Mortgage Advisers will talk to you in plain English and help you choose the mortgage that's right for you. contact us

There are many things that you'll need to do and to think about:

  • Contact New Mortgage Finder Spanish Home Loans and talk to a Mortgage Adviser

  • Start looking for a property

  • You'll need to appoint a Spanish lawyer ("abogado") to deal with the
    legal side of buying the property. There are major differences between
    UK and Spanish property law which you need to be aware of before
    you go ahead. In particular you need to know that, under Spanish
    law, contracts to buy property can become legally binding very
    quickly. So it's important to take legal advice before you sign
    anything.

  • If you're thinking of buying a property which is part of a community
    development, you need to find out what community fees you will needto pay and how much they are likely to be

  • Think about what facilities there are in the local area e.g. medical
    centres, transport links, entertainment and shops

  • if you want to buy a property that has a view of the sea or
    countryside, think about whether future developments might spoil the
    view

  • Check out properties in the surrounding area to see if they are
    finished, or when they are due to be completed

  • Check to see if there is any major work that needs to be done on the
    property and if so, what it is likely to cost. We strongly recommend
    that you seek professional advice from a surveyor

  • Make sure that you spend enough time looking at properties. Do not
    hurry or be pressurised into making a decision that you may later
    regret. When you have found a property that you like, visit it at
    different times of the day to make sure that there are no hidden
    surprises. Contact us for advice

How much could you borrow?

When deciding how much you could borrow we will need to take into
account how much income you have, your financial commitments and
your financial history.

The total of all annual mortgage and loan repayments being made by the customer, including those for the new mortgage with “la Caixa”Savings Bank, must not exceed 40% of net annual income, e.g. Debit ratio: annual loan commitments/annual net income x 100 = maximum 40%.

Properties can be bought in either single or joint names.

Single applicant
Up to 3 times your main income

Joint applicants
Up to 3 times the main income plus the second income or 2.5 times the joint income.

The minimum property/value that we can arrange a loan on is £40,000/€55,000.
All applications will be considered individually. Loans can be repaid over a
period of up to 20 years.

Loans can be in Sterling or Euros.

You can borrow up to 75% of the sterling equivalent or the valuation of
the property.

The different types of mortgages

The following gives you a brief description of the different types of mortgages that we offer.

Variable rate mortgage

With a variable rate mortgage the interest rate is linked to Bank Base Rate
and will change from time to time. On Spanish home loans the lender
operates a system of "immediate review". This means that each time the
interest rate changes, your mortgage payment will alter. The lender will tell
you by letter each time the interest rate changes and tell you what the
new payment will be.

Fixed rate mortgage

With a fixed rate mortgage you know exactly what the interest rate will be
for a specified period, normally at the start of the mortgage term. At the
end of the fixed rate period, the variable rate (which is linked to Bank Base
Rate and which may be either higher or lower than the fixed rate that
previously applied) will apply. You should therefore budget for the possibility
of higher payments at the end of the fixed rate period and for the remainder
of the mortgage term.

Base Rate Tracker mortgage

With a Base Rate Tracker mortgage the interest rate charged tracks the
Bank Base Rate for the mortgage term. The lender will vary the interest rate
within 30 days of a Bank Base Rate change.

How can you repay the loan?

You can choose either a repayment mortgage or an endowment
mortgage. Need help deciding contact us.

Repayment

With a repayment mortgage, you make a single monthly payment which
is made up of a capital repayment and an interest payment.During the
early years, a large part of the monthly payment is made up of interest; in later
years more of the capital is repaid. The main advantage of a repayment mortgage isthat you know the loan will be paid off at the end of the term of the mortgage.


In all situations it is necessary to take out a life assurance policy in
case you die before the the mortgage is fully paid off.

Endowment

Every month you make two payments; one is interest on the loan and is paid to the lender; the other is a premium for an endowment policy which is paid to a life assurance company.

The endowment policy premiums will be invested in special funds such
as stocks and shares, money and/or property. If the policy you have
chosen performs well, you should be able to pay off the loan from the proceeds when it matures.

Life assurance is included with an endowment policy in case you die
before it matures. If the policy does not perform as well as expected, you will have to find the shortfall of money required to repay the loan.

Important Information

If you decide to cancel an endowment policy which has been arranged
to repay your mortgage, the surrender value or proceeds (if any) may
not be enough to clear the outstanding loan. If this happens you will
need to make alternative arrangements for repaying the shortfall.

Interest

If you have a variable rate mortgage, interest will be charged on your loan
using a margin above Bank Base Rate by reference to the average
variable base lending rates of the UK banks named in the offer of advance
and mortgage deed. The method of calculating interest will be fully
explained in the mortgage offer and mortgage deed. You will be told of any
changes to the interest rate charged on your loan by letter.

If you have a fixed rate mortgage you know exactly what the interest rate
will be for a specified period at the start of the mortgage term. At the end
of the fixed rate period, the mortgage will move to a variable rate.

You will be sent a mortgage statement once a year. The statement will
show the payments made by you together with any debits, including
interest, charged by us and details of the rates of interest charged to your
account during the year. You can choose which address you would like this
to be sent to.

Interest will be calculated on a daily basis and will be charged to your
account at the end of each calendar month. This means that every
payment you make will affect the amount of interest charged to your
account. If you make an overpayment, this will reduce the balance on which
interest is charged. If you make an underpayment or miss a payment, this
will increase the balance on which your interest is charged. If any fees,
charges, insurance premiums or other sums are charged to your mortgage
account these will increase the balance on which interest is charged.

 

Mortgage payments

When you take out a mortgage we will tell you your monthly payment in
your mortgage offer. On Spanish home loans we operate a system of
"immediate review". This means that each time the interest rate changes,
your payment will alter. We will tell you by letter each time the interest rate
changes and tell you what the new payment will be. Payments will be
collected by direct debit.

Lump sum payments

You can make capital repayments (lump sum payments) to reduce the
balance of your loan. This will reduce the amount on which you pay
interest. The minimum lump sum payment is £250. If you have a repayment
mortgage you have the choice of either reducing the amount of future
monthly payments of the length of the remaining mortgage term. The lump
sum will be credited to your account immediately and your monthly payment
(or the remaining mortgage term) will be recalculated on the first day of the
following month and changed from the next monthly payment you make.

Remortgages

You can also consider arranging a remortgage for an existing property in
Southern Spain. You may wish to change your monthly payments or raise
finance for home improvements or repairs

Further advances

You could use some of the equity in your property to take out a further
advance.

If you already have a mortgage with us and want to make improvements or
repairs to your home, or build an extension or even a swimming pool, you
could take advantage of a further advance. A further advance is an
additional loan which is also secured on your home. Further advances are
only available if there is sufficient equity available in the property. We
cannot lend more than 65% of the value of the property.

Other costs you need to think about:

Legal costs

The legal processes in Spain are different to those in the UK, so you will
need a lawyer who is experienced in Spanish land law to act on your behalf.
In particular, your lawyer will need to investigate the legal title to the
property and make sure that it is correctly transferred to you. We have business relationships with specialist lawyers on the Costa del Sol to make
this part of buying your property as easy as possible.

We will be represented by our own lawyers in relation to the mortgage and
you will have to pay their fees for acting on our behalf. Usually, our lawyers
can also act on your behalf and this may result in a saving when compared
with the cost of instructing separate lawyers. Legal fees are generally
higher than in the UK.

Application and valuation fees

When you apply for a mortgage you will normally have to pay a fee to cover
the cost of our mortgage valuation. The fee is based on the sterling
equivalent valuation of your chosen property.

Arrangement fees

You will also have to pay an arrangement fee in some cases when you applyfor a mortgage, which is used to reserve the loan and cover our costs.

Insurance

When you buy a new home it's important that you have the right insurance
protection.

You need to arrange insurance to make sure that the property is insured forthe full amount that it would cost to rebuild in case of fire, flood or
subsistence. It is your responsibility to maintain insurance on the property
throughout the term of the mortgage.

We will arrange your Life and Sickness insurance to protect you against lossor reduced income and to protect your in the event of Death or serious ill health.

Do you need to get an independent survey?

We will arrange for a mortgage valuation to check the suitability of the
property as security for the loan. In addition, we strongly advise that you
get an independent survey to protect your own interests. We would be
pleased to help you arrange this through your relationships with surveying specialists.

Payment difficulties

Your mortgage payment is probably the most important payment you have
to make each month. If you fail to keep up these payments you could lose
your home. If you do have problems with your mortgage payments, please
contact us as soon as possible.

However with a little planning this could be avoided with the appropriate
insurance.

Early repayment charges

If you want to redeem your mortgage or change to another mortgage before
then end of a special scheme you may have to pay an early repayment
charge. You will be advised of any early repayment charges in your
mortgage offer.

Portable

All of our mortgages are portable. This means that, if you move home in any
special rate period, you can have a mortgage on your new home (if it is
satisfactory security for a loan and if all other lending criteria are met), on
the same terms for the remainder of that period.

 

YOUR HOME IS AT RISK IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOAN SECURED ON IT. Currency fluctuation could mean you end up paying more for your property than you originally thought.

Mortgages are subject to status and satisfactory security. In certain circumstances a life assurance policy may be required. Mortgage loans are not available to anyone under the age of 18. Loans are secured on your home. Written quotations are available from the Society.

 

New Mortgage Finder is authorised and regulated in the United Kingdom by the Financial Services Authority. The Company provides financial advice relating to non-regulated products.


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