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Spanish mortgages and how they work

All mortgages are full status and proof of income and outgoings will be required. Spanish mortgages can be arranged for acquisition, renovation and construction. Due to the nature of financing new properties a "letter of intent" is issued by lenders rather than a mortgage offer until the property is completed. Re-mortgages are available through specialist lenders.

A deposit of 25% of the purchase price is required and you will also be liable for solicitor's fees. Euro and Stirling mortgages are available, and the minimum loan amount you can borrow depends on the lender you use. Mortgages are generally Repayment loans and can be taken over a 5-25 year term, although some mortgage lenders will be happy to provide Interest Only loans. All mortgages should be fully repaid by the age of 70 and life cover is required. The mortgage is secured on the property in Spain.

Spanish lenders assess eligibility for a loan on the applicant's ability to service the loan and not potential rental income from the property. The general guideline is as follows: of an applicant's net income 35% should cover existing outgoings and the monthly repayment on the Spanish Euro mortgage. If you are self-employed income is assessed as the average of the last three years' net income. Rental and investment income will also be considered. If employed a lender will base your income on your payslips and the amount that is credited to your account monthly. Outgoings considered are liabilities such as mortgage/rent in the UK, personal loans & maintenance commitment.

For example - If you have a net monthly income of £2000 with a UK mortgage of £500 and no other outgoings. Taking into account 35% of the income, that is £700, a borrowing with a monthly repayment of £200 could be considered.


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