CHOOSING a mortgage is a lot like buying shoes. There are a lot on offer but only the right one fits.
Different mortgage types cater for different factors, be it nationality, age, employment type and level of income, whether large or small, and your available deposit.
In Spain, there are five main mortgage types. All of which, apart from interest-only mortgages, which no longer exist, can be obtained through the finance bureau.
1) Non-resident mortgage
The non-resident mortgage is for people who are resident in any other country other than Spain – i.e. for people not in possession of a Spanish residency card and not paying taxes in Spain for at least two years.
It is designed for those buying a second house or holiday home.
The maximum LTV (loan-to-value) is 70% of the client’s purchase price with a maximum repayment plan of 30 years (the term plus your age must not exceed 75 years old).
Clients from non-eu countries may only qualify for a lower LTV.
The finance bureau has negotiated rates from 1.75% plus Euribor upwards, depending on the loan-to-value and the number of products that are contracted with the bank.
2) Spanish resident mortgage
Designed for Spanish residents who are looking to buy a first, second or holiday home, a Spanish resident mortgage offers the highest LTV rate (80-100%).
The maximum payback term is 40 years and again is only available to those under 75.
Interest rates start at 1% plus Euribor.
3) Interest only mortgage in Spain
These used to be a popular form of loan for property developers but they no longer exist and are not on offer in Spain.
4) No age limit mortgage in Spain
These are only available from Scandinavian banks for clients coming from Norway, Sweden and Denmark and are available for the over 75s.
5) Equity release
Available to both Spanish residents and non-residents, equity release is for clients who own mortgage-free property or one with a small mortgage.
This mortgage allows you to borrow against the property for refurbishment purposes or to finance another purchase.
The property must be owned by the person requesting finance against it and it is again only available to the under-75s. In the event that the property-owner is reaching the top end of the age-limit, it may be possible to bring in a younger guarantor.
The maximum LTV is 70% with 30-year term and a 2.5% interest rate.