Spanish Mortgages, Frequently Asked Questions:
Q. Do I get a mortgage in Spain or the UK?
A. If you want to get a mortgage on your property in Spain, you will need a Spanish mortgage. This mortgage may be with a Spanish bank or with a British bank which has branches in Spain.
Q. What currency will I pay my mortgage in?
A. With a Spanish mortgage you pay for your mortgage in Euros. The monthly amount in pounds will vary, depending on the exchange rate. Currency brokers can provide a service for regularly transferring pounds into Euros and also fixing the rate.
Q. How do Spanish banks assess how much they will lend?
A. Typically, monthly mortgage payments cannot exceed 30-35% of your monthly disposable income. Disposable income is defined as income after tax and after any outgoings on mortgages, loans or credit cards that are not paid off monthly.
Incomes are combined for joint applicants and, if needed, some banks will accept a third applicant/guarantor which can help boost income.
Q. Are there any age related restrictions on Spanish mortgages?
A. Age restrictions vary considerably between different banks. Some banks will not loan on a term greater than 15 years if you are over 50. Others require that the mortgage must be repaid in full by the age of 75. If you want to borrow on a long term to keep monthly repayments low, then a younger guarantor will often be accepted.
Q. What is Euribor?
A. Euribor is the reference rate that European banks use to set the rate on mortgages (where British banks use the Bank of England Base Rate).
Euribor can be measured over various periods of time: 1 month, 6 months, 12 months etc. Traditionally, Spanish mortgage lenders have used 12-month Euribor which means that the mortgage rate is correspondingly fixed for 12 months (like having a 1 year fixed rate mortgage in the UK).
Nowadays some of the banks use 1-month Euribor and others use 6-month Euribor. Always check this so that you know how often the rate can change.
Euribor stands for European Inter-Bank Offered Rate.
Q. When can I get a Spanish mortgage?
A. You can get a Spanish mortgage when your property is handed over for completion (when the final 60% payment is due). It is not possible to get a Spanish mortgage on the stage payments. Applications should be made no more than 3 months in advance of completion.
