Buying Guide

With many years of experience Somerset Mortgages provides an independent and comprehensive service to help you buy or re mortgage your property in Spain. We work with all the Spanish banks, the UK banks that operate in Spain and a number of European investment banks. Working with so many banks allows us to offer you the best deal, whatever your circumstances.

We have a close working relationship with the banks in Spain and due to the volume of business that we introduce, we are regularly able to offer lower interest rates and fees than you would normally be offered.

What are the steps involved in getting a Spanish Mortgage?

1. Find out how much you are eligible to borrow by completing our quotation request form.

2. Instruct Somerset Mortgages to obtain an 'Agreement in Principle' on your behalf.

3. Go to Spain and find a suitable property.

4. Obtain an NIE Number.

5. While in Spain, sign a sales agreement (Contrato de Compraventa) & transfer the deposit via Somerset FX to secure the property.

6. Send Somerset Mortgages a copy of the signed sales agreement, which we will submit to the lender.

7. Lender instructs valuation.

8. Lender issues mortgage offer.

9. Arrange buildings insurance. This can be provided by Somerset Mortgages.

10. Transfer balance of deposit via Somerset FX.

11. Arrange monthly mortgage payments with Somerset FX Regular Payment Plan.

12. Completion

What type of property can I get a mortgage on?

We can arrange mortgages for individuals or companies to buy main homes; second homes; rental or investment properties; off-plan properties and commercial properties. Equity release mortgages are available. Bridging finance is also available.

What currency will my mortgage be?

All Spanish banks will provide mortgages in Euros, but we can also arrange mortgages in other currencies such as US Dollars, Sterling, Yen and Swiss Francs.

What is the maximum loan amount (LTV%)?

The maximum loan to value is 80%.

Lending Criteria

Lenders calculate financial commitments (loans and rent) including the requested mortgage, as a percentage of stable pre-tax income. As a general rule the ratio should not exceed one third, but obviously this depends on the figures involved as the higher the income the higher the debt ratio can be. In fact, most lenders try to apply their rules with common sense and look at the actual amount of disposable income, not just the percentage.

What is the minimum loan amount?

The minimum loan amount that Somerset Mortgages will consider is €100,000.

How long is the term of the mortgage?

Mortgages must be fully repaid by the age of 80, with a minimum term of 5 years and a maximum term of 40 years.

How much will the bank charge me?

Generally the banks will charge you a 1% arrangement fee. Where possible we will negotiate on your behalf to reduce this.

Do I need life assurance?

This is not mandatory, but recommended. Somerset Mortgages can help you arrange this at minimal cost.

Which mortgage types are available?

Both capital repayment and interest only mortgages are available for both purchase and equity release.

Interest rates

The interest rate will depend on the currency of the mortgage, for example of a Euro mortgage was selected then the EURIBOR (European Interest Offered Rate) would apply, plus the banks margin.

Buildings insurance

This must be in place before completion. Somerset Mortgages can provide you with a quote.

Bank account

You will be required to open a Spanish bank account before completion. Somerset Mortgages can assist you with this at no additional cost, if required.

What timeframe is involved in securing the mortgage?

An Agreement in Principle can be obtained from a lender once all the requested documentation has been submitted. This takes approximately seven working days. However, for loan amounts in excess of €750,000 this may take longer.

A minimum of eight weeks should be allowed from application to completion.

Organising payment of your Spanish mortgage

Please be aware that missing a monthly mortgage payment may have serious consequences and we therefore strongly advise participation in the Somerset FX Regular Payment Plan. This service gives you peace of mind in the knowledge that your Spanish mortgage repayments will be met automatically each month.

Completion

Mortgage funds will be released by the lender to your Notaire for completion of the purchase.

Fees and Taxes

• Somerset Mortgages charges a non refundable administration fee of £150 to prepare, package, facilitate and courier your mortgage application.
• Somerset FX does not charge a fee or commission.
• Bank's arrangement fees are generally 1%. Where possible we will negotiate on your behalf to reduce this.
• Valuations are required by all lenders. The cost varies from lender to lender and is dependant upon the size of the property.
• The estate agent commission will vary from 4% - 12%.
• The Notaire will provide you with a breakdown of fees payable once a sales agreement has been signed. The Notaires fee will include Stamp or Transfer Duty and the Mortgage Registration Fee.