Mortgages in Spain
This introduction gives a brief overview of products and services available. Caja Duero is the only Spanish bank to offer a dedicated service, for people from the UK buying in Spain, with a local representative in the UK. We are able offer mortgages in Spain in euros, and re-mortgages in the UK in sterling via our Building Society colleagues.
Our spanish mortgages are provided directly by Caja Duero, one of Spain's largest savings banks, so there are no brokerage fees for arranging the mortgage, whether in Spain or the UK.
Some of the advantages of using our service are
• We can lend to you in Spain - in euro; and in the UK - in sterling
• We lend up to 80% of the property value in Spain, and 90% in the UK
• We regard pensions and any other permanent allowances as income
• We can take into account 70% of the net income from rented property in the UK
• We have a minimum loan of only €25,000 ( £ 25,001 in the UK ), and no maximum
• We lend from 5 to 20 years in Spain, 5 to 25 years in the UK ( and interest-only )
• Our Spanish service covers the whole of mainland Spain plus Majorca, and we can lend on new or
resale properties
• Our re-mortgages in the UK are independent of the property, so you can borrow to finance properties
that our Spanish service does not cover ( such as country properties, properties in the Canary Isles,
and the stage payments on new properties )
• You can apply before finding a property so we can give you an approval in principle
• In Spain, payments can be made quarterly in arrears to cut the costs of transfer
• In Spain, you can repay up to 10% of the outstanding capital each year without penalty; in the UK, the
loans are flexible ( subject to specific product conditions )
• You can arrange everything from home by telephone & post, or by e-mail
• In Spain, we normally lend up to age 65, but in the UK there are no age limits
• In Spain, there is a 1% application fee ( paid on completion ); in the UK the application fee depends on
the product chosen. We do not charge any brokerage fees.
Our Spanish service
Mortgages in euro are available up to 80% of value. Mortgages up to 70% of value are at 12-month Euribor + 1.0%, and typical monthly repayments are £66 per £10,000 borrowed over 20 years, £79 over 15 years, £106 over 10 years, or £189 over 5 years. For loans over 70%, the rate is 0.5% higher, which adds around £3 per month for every £10,000 borrowed.
Our euro mortgages are all repayment mortgages - endowment or interest only loans are not generally available from Spanish banks.
Mortgages in sterling are currently not available. We are looking to introduce a mortgage system that will handle sterling loans, so please ask if you particularly want to borrow in sterling in Spain - also, in exceptional cases we may be able to approve a sterling loan now and administer it manually. If we are able to offer a product in sterling, it will only be to lower % of the value for a maximum term of 15 years, because we will be bearing the currency risk between the value of the property ( in euro ) and the balance outstanding on the mortgage ( in sterling ). The interest rate would be 3-month LIBOR + 1.0%. At the moment, if you want a sterling loan, our advice is to borrow in the UK, where the service is more convenient and flexible.
In addition to the interest, the only other payment required for the mortgage is a 1% application fee ( which is only charged on completion ), and a valuation fee, which is on a scale of around 0.1% of the value, with a minimum of around £120. We will ask you to send € 500 ( around £300 ) as an initial deposit to the current account which we will open automatically for you, and the valuation fee is paid out of this.
As far as income is concerned, like most European banks, we lend on the basis that your total monthly repayments should not exceed 35% of your ( joint ) net monthly disposable income ( after tax and national insurance ). To work out how much we can lend, we first calculate this 35%; from this, we deduct your monthly commitments in the UK ( monthly mortgage repayment, rent, repayments on any other loans, and any other legal commitments such as under court orders ). The balance is available to meet the monthly mortgage repayments in Spain, and we then convert this into a loan amount, depending on the term required. More information is given in the mortgage guide.
Our re-mortgage service
If you prefer to raise the finance by re-mortgaging your UK property, we offer this facility in co-operation our Building Society colleages.
In some situations there can be advantages in using your UK property as security for financing your Spanish home:
( 1 ) it enables you to obtain the finance independently of the property value ( i.e. you are not subject to the Spanish 80% limit )
( 2 ) if you are buying a new property, finance raised this way can be used to pay the stage payments, whereas a Spanish mortgage is not available until the construction has been completed
( 3 ) you can use a re-mortgage to finance the purchase of a country property or a property to restore, which may not be suitable security for a mortgage in Spain
( 4 ) you can borrow in the UK on an interest only basis, which is not available from Spanish banks
( 5 ) there are no age limits or life cover requirements for mortgages in the UK, which is the case in Spain
( 6 ) the loan and repayments will be in sterling, so there is no currency risk.
Loans are available up to 90% of value, based on salary multiples of 3.5x one income, or 2.75x joint incomes.
If you are interested in this option, please contact us in the first instance; we will arrange for the Building Society to ring you. They will talk through the transaction with you to check that there will be no problems, and will then send you an information pack with relevant product brochures and a simplified application form.
Everything can be arranged by telephone and post. |
