Charles Hamer's Spanish mortgage service
SPANISH MORTGAGES FOR THE NON- RESIDENT WISHING TO PURCHASE A SPANISH HOLIDAY HOME , A RETIREMENT HOME, OR A FUTURE MAIN RESIDENCE
In 1988 , Charles Hamer commenced trading . We are Independent Financial Advisers specialising in securing Euro mortgages for the French and Spanish purchaser wishing to purchase either a holiday home, retirement home or a main residence in Spain . We offer a hand-holding service to guide all our clients through the mortgage process, with a personalised service and bilingual staff . Our experience of 3 decades has resulted in having well established banking contacts in Spain able to offer our clients both an exclusive service and competitive mortgage schemes .For up-to-date rates and mortgage schemes please click on our mortgage calculator. By inserting your chosen purchase price and mortgage sum the calculator will provide you with a personalised budget having taken into account associated conveyance and mortgage costs. The page is linked to a live currency exchange rate provider, therefore the figures provided in sterling are based on today’s current exchange rate.
The financial lending criteria of Spanish Banks
The Euro mortgage is secured on the Spanish property. The Loan to value (LTV) is equal to 70% of the purchase price for both holiday homes and retirement homes . Please contact us for the maximum mortgage loan to value, if the property is to be your main residence.
Lending criteria applied by Spanish mortgage lenders is stricter than UK lenders . The reasoning behind this is that unlike UK lenders, Spanish banks are unable to take a charge on the borrower’s main residence, (in the UK), and do not have the added security of the borrower crediting their monthly salary onto the Euro bank account from which the future Spanish mortgage payments will be collected. Therefore unlike the income multiple calculation applied by UK lenders , Spanish banks apply a credit ratio and take into account 33% of income (net of tax) when assessing affordability . In other words, the total sum of your regular monthly commitments ( these include rent or mortgage in relation to your main residence, personal loans and maintenance payments, where applicable ), are added to the new Spanish monthly mortgage commitment and this figure should not exceed 33% of your net monthly income.
We offer a free mortgage eligibility service where we calculate the maximum mortgage that the Spanish bank will consider based on your current income and outgoings either by phone or by email. To take advantage of this free service, please contact our office on 01844 261886 or complete and return the Spanish "Fact Find" form which is emailed to you automatically when you request a Spanish mortgage illustration on the online calculator page , please click here
The Varous types of Spanish mortgages currently available
Our Spanish lenders consider new builds, (purchased off-plan) and existing properties.
Banks will offer funding for property on Urban land. Very few banks will lend on property registered as Rustica or any other classification, and if they do it will be at a lower loan to value than the standard 70%. When applying for a loan it is best to check the Spanish Nota Simple of any potential property early on in the process to check the status of the land.
The majority of Spanish mortgage schemes are offered on a classic interest and capital repayment basis, the variable and short-term fixed rate mortgage schemes are linked to EURIBOR . The banks also offer fixed rates for the whole mortgage term. The duration of the mortgage term is usually between 5 and 25 years, but 30 year terms are available from some lenders ,depending on the age of the applicant at outset, (as normally the term should not exceed the borrower’s 70th-75th birthday) . Most mortgages offered in Spain are variable rate trackers linked to 12 month Euribor. Each bank then offers a margin above Euribor. It is the margin above Euribor that differs between mortgage schemes. Early redemption penalties usually apply up until the fifth year for most variable rate schemes and usually for the duration of the mortgage term if the rate is fixed.
For an illustration based on today’s rates and schemes please click here
The mortgage application – supporting documents
You will need: -
• Proof of identity & residence
• Proof of income & outgoings, proof of personal contribution toward the purchase
• Bank statements for the past 3 to 6 months from all personal bank accounts
• The Spanish property details.
On receipt of a mortgage application the Spanish bank will carry out a Credit Search Report to verify your UK commitments and financial history . You will be required to sign and return a letter of authority to the bank before this can take place.
You will be required to obtain a NIE number (fiscal number) in Spain, we can assist with this requirement.
Our lenders are able to offer an Agreement in Principle service for mortgages starting from 100 000 E. It usually takes approximately 3 working days, to obtain this confirmation. Please note that it will facilitate the process if the necessary documents are provided at outset.
Should you require a Spanish mortgage in excess of €750,000, please contact our office for relevant details and mortgage schemes, as the on-line mortgage calculator will not be able to provide you with the current rates.
Once you have found a suitable property and commence the mortgage application you need to allow between eight to twelve weeks from the application being received by the bank to completion, as a general rule. Being Key Account holders with the lenders we can ocassionally request for the bank's assistance to reduce this timescale.
Life assurance is not mandatory for a Spanish Mortgage. However, it is highly recommended and rates are more attractive if you take out a policy with the lender’s associated life assurance companies . During the course of the application we can forward details to demonstrate the cost. The estimated cost provided is based on your life assurance application being accepted on normal terms, once medical underwriting has concluded.
Buildings / contents Insurance
Buildings insurance is a requirement and your notaire will require you to provide details of the policy prior to completing the purchase . Contents insurance is at your own discretion. Some Spanish banks may require the policy to be assigned to the bank. We will obtain details of the cost of a relevant buildings insurance policy for you, during the course of the application.
You will need to open a Spanish bank account before completion, from which your future Spanish mortgage repayments will be debited. Most lenders insist that you open an account with them. If this is not the case then we will advise you, so that you can open an account independently.
Payment of your Spanish mortgage
Please be aware that non-payment of a Spanish mortgage payment may have serious consequences and we therefore strongly advise you to arrange a regular standing order from your UK account to the Spanish account to prevent mortgage arrears. A number of foreign exchange providers offer a renewable 12 month regular payment plan. The exchange rate is fixed at the start of the plan, and the agreed amount will be debited from your UK account and sent to your Spanish account each month. This service gives you peace of mind in the knowledge that your Spanish mortgage repayments will be met automatically each month. One such Foreign Currency company is SMART CURRENCY EXCHANGE. Please refer to the section below or the on-line mortgage calculator page to find details of this company and the services provided.
A representative from the bank is usually present to issue the mortgage cheque, or the mortgage funds are transferred to the collection account of the chosen Notario. You do not have to be present at completion and can leave your authority by giving Power of Attorney to your chosen Spanish Solicitor, to complete the purchase on your behalf. Please refer to your solicitor for more information regarding this process.
The bank’s arrangement fee - as a rule this is usually 1%-1.5% of the loan amount. Some of our lenders cap the fee, under our agency, please contact our office for further details.
Valuation reports - this is a requirement of Spanish banks for non- resident mortgages, the cost varies from bank to bank and is borne by the borrower. We will obtain the cost on your behalf prior to the bank instructing the surveyor. As a general guide you can estimate that the cost of the valuation fee represents approximately 0.10% of the property value, on average.
Estate Agent’s Fee - when the sale is via an estate agent there will be an estate Agent fee, in some cases a percentage of this cost may be included in the mortgage amount.
Spanish Solicitor / Notary Fees
- The conveyance fee is a tax applied by the Spanish Government on the transfer of title of a Spanish property. The Government therefore sets these costs, they are on a sliding scale and provided to the notario offices. They do vary depending on which Spanish Department the property is situated in. Please refer to our on-line Spanish mortgage calculator page for an estimate of the conveyance fee based on the actual department in Spain that the property is situated in . Simply insert the name of the relevant Spanish County/Department in the field shown prior to drawing down the mortgage schemes for your chosen mortgage amount.
-The mortgage registration fee - the Notario will also be responsible for collecting the mortgage registration fee from the purchaser. This is to enable the registration of the legal charge on the Spanish property on behalf of the Spanish bank at the Land Registry. The fee to register the Mortgage Deed is known as an AJD which can vary from region to region but generally it is approximately 1.8% of the mortgage amount . The exact amounts are worked out by a complicated formula provided by the Spanish government and not the Spanish bank that happens to be providing the Spanish mortgage. Please refer to our Spanish mortgage calculator for an estimate of this fee.
- Our mortgage arrangement fee - We charge a non-refundable application fee of £250. This becomes payable once we have carried out an initial assessment and received the initial proposal from the Spanish bank. A further Success Fee equal to 0.5% of the mortgage amount becomes payable on your receipt of the Spanish mortgage offer. This is payable during the 11 day cooling off period between your receipt and return of the signed mortgage offer to the bank.
- Legal and Tax advice - it is always advisable to obtain professional advice regarding your contractual obligations and the tax implications of purchasing a property in Spain, before entering into a purchase contract.
Euro /Sterling Exchange Rate
There are means to minimise the exchange rate risk. One way to reduce this is to take out a long-term fixed rate mortgage with the Spanish bank so that the mortgage payment expressed in Euros remains constant throughout the duration of the mortgage. By contacting a company that specialises in Foreign exchange rates when converting sterling to Euros, you should be able to obtain preferential terms over those offered by mainstream UK banks. It’s often worthwhile to speak to a company who specialises in currency exchange to discuss purchase ahead contracts to benefit from more favourable conversion rates than those offered by your own bank and reduce future exposure to currency Fluctuation. Always check that whichever company you use is regulated by the relevant authority – the FCA. One such established company is Smart Currency Exchange and will be able to provide you with up-to-date exchange rates. You will also find that their current exchange rate is quoted on our Spanish mortgage calculator, at the foot of the heading labelled - estimated purchase costs. The figure quoted in sterling is the live Euro/Sterling exchange rate available with the Smart Currency Exchange Group.