CHARGES TAXES & EXPENSES FOR PROPERTY

Mortgages

You are 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 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 or recommend you a mortgage broker.

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.

The amount you can borrow 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 30-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

your 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

For self-employed mortgage applicants:

your latest income tax returns, where applicable

copies of your accounts for the last 2 – 3 years

a report from a Chartered Accountant confirming your personal income from business activities

a copy of your passport or residence permit if you are a resident

copies of your personal bank account statements

It is important to remember that in Spain a mortgage is attached to the property rather than the person and is registered on the title deed (Escritura Pública) at the Property Registry (Registro de la Propiedad). If you are buying off plan the developer may have a mortgage already in place on the property and you simply take over the responsibility for paying it on completion. Obviously the lender will want to check your financial status before agreeing to this.

The fees for arranging a mortgage usually come to about 3% of the amount you borrow, but this will be lower if you are taking over the developer’s existing mortgage. These fees include the bank’s commission, and stamp duty, the Notary and the Property Registry.

If you need further information on mortgages talk to us, and we can explain and guide you through the best options available to you.

C/Alfonso XIII, Edif. Terminal I, 2 nº5, 29640 Fuengirola, Malaga.

Tel: +34 952 58 57 21 Fax: +34 952 19 71 47

Web.: www.lawyerscostadelsol.com  E-mail.: info@navarrete.dk