INAVATIVE SPANISH MORTGAGES

Through our partnership with Sovereign Law SL we are able to offer you an outstanding selection of inventive Spanish mortgages. It  is usually far more beneficial to raise the money to purchase your villa or apartment in Spain than the UK as interest rates can be up to 50% lower, resulting in your monthly payments being significantly reduced.

Inheritance Tax (YOUR URGENT WEALTH WARNING)

In Spain there is inheritance tax levied between spouses so it really does help to have a Spanish mortgage registered against the property as the tax is only based on the actual equity you have in the property, by reducing this you reduce your tax liability. If you decided to raise the money in the UK and pay cash, should one partner die the other will have to pay 35% of the value of the property in tax even if you have only owned it for 1 day! To further complicate the issue there is no joint taxation agreement with the UK so you could also find that there is a further liability there to UK tax upon second death. For further information on how to mitigate your potential tax liability please email or call with your queries to Bryan Wawman FPC1 CeMAP ON 0034 670 33 44 26.

CURRENT MORTGAGES AVAILIBLE

Low rate:
Most mortgages offered in Spain tend to be variable typically around 4.25%.

Fixed  rate:
These tend to be less popular currently as the rates can be up to half as much again as the standard variable rates.

Discount / cash back / low start :
None of these are currently available in Spain.

Self certified:
No proof of income or related documentation is required, you will however be required to fill in the application confirming your earnings and the bank will do a UK credit check on the applicants. The bank will lend up to 60% of the valuation figure on a 30 year interest only basis regardless of age.

Interest only:
Up until recently very few Spanish banks would consider this however over the last couple of years they appear to be slowly catching up with the UK. Most banks will now offer the first year or two interest only, it then reverts to repayment. Interest only options for longer periods are offered for periods of 5 years or 10 years with two banks, both reverting back to repayment after that. Finally one bank has now brought out a 30 year interest only mortgage regardless of age, up to maximum advance of 60% of valuation.  NOW AVAIBALE FOR REMORTGAGES 

Maximum Loan to Value:
This currently is 80% of the valuation figure, which if you are buying a discounted property could in actual fact give you over 100% of the actual purchase price. For an 80% advance the bank will insist on you taking their mortgage guarantee premium insurance which currently costs 1% of the mortgage advance. They will also require a UK Experian credit report, P60 and last 3 months pay slips, for the self employed they will require the last self assessment tax return.

Bridging mortgages:
If you currently own a property and wish to buy a second the bank is happy for you to use both properties as security for the one loan. Originally designed for those wishing to purchase a new home but unable to currently sell their existing property, it has however become increasingly popular with those wishing to build up a buy to let portfolio. Provided there is sufficient equity in the first property on many occasion a second can be purchased with out any capital out lay. The repayments are structured as follows: no repayments for the first three months ( the unpaid interest that accrues is simply added to the loan, the following nine months are interest only based on approximately half the mortgage amount, again the interest not paid is added to the loan, years two and three are interest only on the full balance, there after it reverts to repayment. Loans can be up to 30 years or age 70 which is ever is the lower, advances are up to 60% of the joint property values.

Construction mortgage:
Available for those wishing to build their own home, the banks will lend either up to100% of the construction costs or 70% of the final estimated value. Most will insist that you purchase the land first and at the time of taking the mortgage that there is no outstanding mortgage against the land.

Land purchase
For the purchase of a building plot or urban registered land the banks will lend up to 50% of the valuation.

Buying a business:
In general unless there is a viable freehold premises you are unlikely to be able to raise the money, banks are particularly keen not to lend against bars due to the high failure rate.

Costs:
When buying you should allow between 12% and 13% to cover your costs and taxes these can be broken down as follows, these are for guide purposes only:

7% of the purchase price for IVA tax

1% plus 16% IVA of purchase price for lawyers fees

1% our brokers fees plus a 650€ admin fee. The 1% is deducted from the mortgage advance and should we not secure you the mortgage we will also refund 500€ of the admin fee)

1.5% to 2% bank  opening commissions again deducted from the advance.

 1% approx Notary fees and taxes

0.1% valuation fee.

All banks will insist you take their buildings insurance, most do not require life insurance and allow you to arrange your own contents insurance

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