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Getting A Mortage In Spain

Key Points For Mortgage Seekers:

You can choose a Spanish bank or a British bank to provide your mortgage.
Depending on who funds your mortgage, your mortgage can be in Euros or British Pounds. Some lenders, such as Abbey and Barclays, allow you to choose which currency your mortgage will be in.
Equity release from your existing home in the UK can be useful. You will then pay your mortgage in Pounds at a UK interest rate.
Eurozone interest rates are considerably lower than British rates - a Euro mortgage will cost you less. (Interest rates in the Eurozone have historically tended to be lower than in the UK.)
Most Spanish banks require that you contribute 20 to 30 percent of the cost/value of the property and they will provide a mortgage for 70 to 80 percent of the cost/value of the property.
If you intend to live in Spain and the house you are buying is to be your main residence, you will usually not need as big a deposit as a buyer who is buying a second home will. In the banks' eyes, people are more likely to default on an overseas second home than they are on their principle residence.

How Much Can I Borrow in Spain?

In the UK, mortgages are commonly based on a multiple of your income - for example mortgages to the value of three times your annual income are very common. A recent trend, as property prices have become increasingly unaffordable in many areas of the UK, is for banks to lend higher multiples - such as four or five times your gross annual income, provided you have a secure, relatively high, income

Most Spanish-based lenders do not provide mortgages based on an income multiple. Instead, they compare your repayments with your income. They work on the principle that your mortgage repayments should be no more than one-third of your income. A higher mortgage than this may be offered if you have excellent prospects of increasing your current income or if you have an excellent credit history or if you have a substantial deposit.