Spain Explained

Obtaining a mortgage in Spain – are things improving?

There was a time when getting a mortgage in Spain was a relatively straightforward process. Before the economic turbulence of the past few years, most people could get one with a small deposit and easily borrow several times their earnings. Then the banks lifted up their drawbridges and potential borrowers were left high and dry.

In Spain, the number of mortgages given to private buyers has continued to fall over the past few years and is now at its lowest level yet. Last year, Spanish banks lent half the amount of money than they did the year before.

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Now, we are led to believe that the situation will be easing for those first time buyers and people keen to upgrade their property. The Spanish Mortgage Association (AHE) has published a report in which it states that in 2014 it is likely that we will begin to see the first signs of recovery in the real-estate market and a rise in the number of mortgages granted to private purchasers. Good news for those keen to buy their own home. If it happens, of course.

The AHE suggest that a mixture of factors including the more stable economic climate, profitability targets and healthier banks will lead to greater confidence in lending and an increase in borrowing. This might not herald a return to the borrowing practices of pre-crisis (and nor should it) but it could allow those who have saved and can prove their ability to meet repayments, the opportunity to purchase a property in Spain.

Sensible borrowing

As mentioned above, the heady days of 100% mortgages and almost unconditional lending are well and truly over. Now you are unlikely to be able to borrow more than 60% of the amount needed to purchase your property.

Spanish banks are expecting a much higher deposit these days and they want to be sure that you can pay the interest, and not just this month. They will want to know that you have a steady and reliable income. It’s not the individual bank staff who will agree your mortgage but the mortgage department of the bank. And there are now much higher expectations of borrowers.

This can be frustrating for those wishing to buy, but ultimately helps to ensure that once you have bought you are in a good position to pay your mortgage in Spain.

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We are, however, now detecting a slight change recently in the banks’ mood. In comparison to last year, when you were very unlikely to be granted a mortgage at all, there is a slight relaxation.

Once more we can see that some Spanish banks are a little more ready to lend. Not like the old days, of course, but still a more promising prospect for those hoping to buy with the help of finance.

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andy gemmell

14 February, 2014 2:29 pm

How does SUBROGATION work
How does SUBROGATION work when taking over an exsisting mortgage and what fees do I have to pay ??


25 February, 2014 9:23 am

Dear Andy

Dear Andy

Thanks for your enquiry. My answer depends upon whether you are the buyer or the seller. In the case of the seller it can be particularly advantageous because you don't have to pay a cancellation fee for the mortgage  to the bank. From the buyer's point of view, although the costs are approximately the same, you don't have to have a valuation of the property, as that has been done already. You will also save on the cost of opening charges but will have other costs to pay as the bank will still want to check your financial status.  

I hope this helps.