On New Year’s Eve, the impossible is possible! December 31, the holiday is on the nose. And some people run to the bank at 9 am. What for?
In short, the mortgage is 100%. How to postpone this? And if in more detail …
Buying property in Spain is a long-standing dream for many foreigners, but not only for them. For the Spaniards themselves, the acquisition of their own home often becomes possible only by the age of forty. This problem is especially acute in cities such as Barcelona or Madrid.
The cheapest apartment in Barcelona will cost 28,000 €, and a luxurious house with peacocks and fountains will go through the roof for 14,000,000 €. But something average and residential at a cost of about 300,000-350,000 €.
For this money, you will get a small apartment of 60 m2-70 m2 in a nice area of the city.
When you have found your ideal option, the question arises … how to buy this home? Where to run, what to arrange?
If you are a Spaniard, or a foreigner with a Spanish residence and a permanent job in Spain, then you are a dear guest of all banks in the country. Literally and figuratively!
Banks with great pleasure and at a modest interest will provide you with a mortgage. The size of a mortgage loan in Spain depends on a number of factors: source of income, credit history, borrower’s age, etc.
Usually, this is 80% of the property value. In very rare cases, the size of the mortgage can reach 100% of the value of the property. The size of a mortgage loan in Spain depends on a number of factors: source of income, credit history, borrower’s age, availability of a guarantee, etc.
If you are a foreigner and want to invest in Spanish real estate, then raising debt capital from a bank will be more difficult for you. The bank very carefully checks the documents of such borrowers and often mortgages for foreigners cover less than% of the value of real estate than for Spaniards or residents.
And now we suggest that you try on a bank clerk’s suit and consider candidates for a mortgage.
Client 1: Juan, Hispanic, 32, entrepreneur, freelance programmer. Earns 40.000 € per year.
Client 2: Jean, Spanish, 30 years old, state employee, earns 24.000 € per year.
Client 3: Maria, foreigner, lives and works in Spain, 40 years old, works on a permanent contract in an IT company. Earns 37.000 € per year.
Client 4: John, 40 years old, foreign investor, does not live in Spain, income 100.000 € / year.
And now the question! Which of the four will get the best mortgage conditions?
Despite the lower earnings and little experience, this is Jean. Civil servants are the least risky clients for banks; Maria will take the second place in terms of attractiveness for the bank.
What do you think, how long can everyone expect on a mortgage?
It all depends on age. The maximum term is about 40 years. It is for this period that the mortgage will be offered to Juan and Jean. For Mary and John, this period will be up to 30 years. However, it is likely that John will be offered an even shorter loan period, as he is the client with the highest risk for the bank,
And what about the size of the mortgage?
There is a golden rule – the size of the mortgage should not exceed 30% of the salary. In 2021, some banks raised this% to 40%.
What about the mortgage interest?
There are three types of mortgages in Spain, which we will discuss in the next post of this series:
- At a fixed rate
- Mixed rate
- At a floating rate
Have you taken out a mortgage in Spain?
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About the author: Galeeva Gulnara, economist, tax consultant, member of the College of Economists of Catalonia No., founder of Contabilidad a Medida (since 2013) (contabilidadamedida.com), Lecturer at the University of Barcelona (2015-2017), Founder of the Joint Business and Legal Consulting (jblcspain.com), Vice President, European Association of Cryptoasset Investors (aseic.eu)
