Spanish mortgage product types

Spanish Mortgage product types, lack some of the sophistication of those from other countries. There is also a difference between what will be offered to a non resident, versus a Spanish National. Understanding the range of loans. In addition any limitations, before making any buying decisions, will ensure you are in a position to safely make an offer.

• All loans in Spain with Spanish Banks are of a repayment nature.
• Terms of between 20 years to 25 years are standard.
• Maximum age by which the mortgage in Spain must be repaid is 75 years. Some lenders will restrict this to age 65.
• Most lenders will want the applicant to be no older than age 65, at commencement of the loan.
• Lenders, whilst technically able to offer longer terms, often look to keep years to a minimum. This is to ensure more capital is paid off quicker. Therefore, in the instance where a client can easily meet higher repayments, a shorter term may be offered.
• Overpayments are allowable by law.
• Maximum early repayment charges for variable rate loans are, 0.25% for 3 years or 0.15% for 5 years, and 0% thereafter. Most Banks apply the maximum by law for both full and partial overpayments.
• Regular monthly overpayments are not an automatic option. You may however request in advance to pay more, in any given month.

• Fixed or mixed fixed/variable rate loans can have higher early repayment penalties, during the fixed rate period.
• Higher redemptions can only be applied as a percentage of the interest rate loss or capital repaid and then the lower of the two. They can be up to 2% first 10 years and 1.5%.

Contact us today for your personal assessment of options available

Interest only Mortgages in Spain

Interest only, once readily available in Spain, has now disappeared from the market. Since the banking crisis of a few years ago, all Spanish Banks have removed this facility. All purchase loans are of a repayment nature. Affordability is assessed against the regular repayment of capital and interest.

• Spanish banks who still offer construction or self build mortgages, may allow the payments to be interest only during the construction period. Where available this would be up to a maximum of 2 years.
• Non Bank of Spain regulated bridging companies can still offer interest only. Minimum loan size 750k.

What type of mortgage products are available in Spain

Non resident mortgages in Spain are generally only for the purpose of a single holiday home in Spain. Therefore normally residential mortgages only. There are three types of mortgage products available.

Variable rate products

Variable rates are available for all non residents that meet Bank criteria. Whilst the rate will fluctuate during life of loan, most are only reviewed 12 monthly. Providing you with 12 months of rate stability each year. At application the Spanish Bank agrees a margin above the Euribor. This margin above remains static for the lifetime of the loan.

• Variable rate Mortgages in Spain, are always traditional trackers.
• Spanish mortgages track the 12 month Euribor
• The rate is reviewed 6 or 12 monthly
• The agreed margin above Euribor remains static for the lifetime of the loan
• The rate is adjusted at review, against the Bank of Spain published Euribor, for completions and revisions within that month.
• By law, early redemption penalties are small, and only for a set period in time
• Spanish lenders can differ on margin, rates, and set up costs

Contact us today to better understand if a variable rate is right for you.

Fixed rates

In recent years, Spanish Banks have added a much wider range of attractive fixed rate products. Within their mortgage in Spain product portfolio. Fixed rates are normally fixed for the lifetime of the loan.  Long term fixes remove exposure to increases in the Euribor, over the lifetime of a loan.

• Of recent years The Bank of Spain has actively encouraged Spanish Banks to increase fixed rate availability.
• Most lenders now have a good range of 10 to 20 year full term fixes.
• Fixed rates, in a lending environment where remortgages are not standard, provide stability, for the lifetime of the loan.
• Early repayment penalties can be higher than variable rate products.
• The Fixed rate level cannot be secured at application, as would be normal in other countries.
• Consequently the rate will be that available at offer, as designated on the FEIN ( Spanish Mortgage offer).
• Most lenders will hold the rate given at financial approval. In the instance where completion happens while the approval is still valid.
• Fixed rates are not available to all applicants. Currency of earnings can affect access.

Want to know more about current fixed rates in Spain, contact one of our advisers today.

Mixed rate products

In recent years a couple of lenders have added mixed rate product types to their portfolios. These provide a shorter fixed rate term. Moving to a variable margin when the fixed rate ends. Mixed rate products can help borrowers hedge against short term rate increases. During periods of rate volatility. Whilst removing longer term exposure to higher redemption penalties. Also allowing in medium term access to benefiting from decreases in the Euribor rate

• Shorter term fixes for 3 to 5 years.
• Followed by variable trackers with lower margins than variable rate products
• Product allows borrowers, during times of volatility, to fix in short term. However also take advantage of dropping interest rates in future years.
• Few lenders offer a mixed rate option
• Nationality restrictions may apply

Contact us to understand more about what products might suit you and what you can borrow.

Buy to let Mortgages in Spain

As a Spanish Mortgage product type these do not exist. However the Spanish Banks do not restrict, the ability of the owner to rent a property out.

• The mortgage in Spain is not going to be considered a loan specifically for rental purpose.
• Future rent is not taken into account.
• Consequently all loans are based on the affordability of the individual applicant.

Commercial Mortgages

Commercial borrowing for a non resident of Spain is very difficult to achieve. Loans are always assessed against the applicants personal situation. Future income generated from the premises, will not be taken into account.

• Non Resident commercial lending, in all but very rare circumstances, is extremely difficult to secure, with Spanish Banks.
• Generally lenders only offer residential home loans. Each commercial application is looked at on a case by case basis.

Need a commercial loan? We can check availability, contact us today