MORTGAGE APPLICATION PROCESS
Step 1: Orientation
Applying for a mortgage in Spain is slightly different than for example in the Netherlands or Belgium. It’s not very complicated, but different, just like the cultural differences in doing business. Mañana, mañana is a well-know saying and prejudice. You will experience it yourself unless you choose the right partners in business like ourselves. Also, the lack of knowledge about the Spanish language can be challenging while reading all kind of Spanish documentation as a purchase or mortgage deed, valuation and Nota Simple. So, in all those challenges it’s good to have a partner in business! So, contact us by email or by phone as soon as possible in order to see what the best option is for you. We are native Dutch speaking but multilingual such as English, German and Spanish.
Step 2: Intake
During the first meeting we will inform you about the process and possibilities regarding a mortgage in Spain including conditions, interest rates, loan-to-value and loan-to-income ratios. We will make sure that after your first meeting all your wishes and preferences are clear to us so we can do our out best to service you on a top level. Mortgages advice is tailor made for every client so for us it’s important to bridge your wants and needs with the possibilities in Spain. It goes without saying that you will receive excellent tips why financing in Spain is so interesting these days from wealth and estate planning perspective!
Step 3: Documents
We will send you the list of paperwork needed to submit the application for your mortgage. In this step we will study your application and documents, translate where necessary, calculate maximum affordability and send a summary to the contracted banks to get the best offer in the market. We will try to match it with your profile and preferences.
We will charge you 50% of our consultancy fee with a 50% cashback if we cannot present you an offer after study.
Step 4: Application
The maximum loan-to-value for non-residents in Spain is 70%. For real estate objects with the classification “Rústico” it can be even lower with a maximum of 60%. The rest of the sum, including costs and taxes is out of pocket. The debt-to-income ratio is between 30% and 40% in Spain, this includes all existing debt and the new loan you are applying for. During the application we will keep you informed in the progress. The banks will carry out a risk-assessment and confirm the approval of the mortgage subject to the property valuation. Terms and conditions always depend on each client ́s personal circumstances and also vary from bank to bank.
Step 5: Valuation
After you have accepted the offer, we will open a bank account and apply for the valuation. A certified surveyor will visit and value the property. As long as the valuation is correct with no warnings or conditioning clauses, the bank will be able to issue the formal offer. If there are issues, we will try to assist to solve this with your agent, lawyer of representative. If the valuation is lower than the purchasing price the bank will adapt the formal offer to the lowest of the two values.
Step 6: Insurance and prepare for completion
Along with the mortgage we will present you an insurance offer, usually provided by the same bank who will grant the mortgage. We will make sure this is effected on completion day. Once everything is in place and after confirming the details with the bank and lawyer, we will send you the final breakdown of costs, listing the various fees and taxes related to your purchase which in general add up to between 10% and 15% of the overall purchase price. At this point, you will also know the exact amount you will need to transfer for the remainder of your purchase. Just before completion day you will receive an invoice of the remaining 50% consultancy fee.
Step 7: Notary test
Since the new mortgage law in Spain, (Ley 5/2019 dated 15th March 2019) a client needs to go twice to the notary within a period of 10 days. In the first meeting with the notary the client needs to take a test containing questions about the terms and conditions of the mortgage. The test is in Spanish and we will prepare you for that test in your own language. After the test, with a minimum of 48 hours, you will go for the second time to the notary for the completion.
Step 8: Completion day
Time to cool the Champagne!
Completion takes place and is witnessed by a notary and two deeds will be signed, the mortgage deed and the purchase deed. The payment will be done with bank drafts. Prepare because sometimes a notary visit will take more time than planned. Once you’ve signed the deeds you are a proud owner of your Spanish dream! Olé!
Step 9: Champagne!
Cheers! That’s the spirit!
Finally, after roughly 8 weeks hard work you can enjoy your new holiday home in Spain.
We would love to be invited to your “housewarming party”.
It’s been a pleasure serving you!