Whether you purchase a property in cash or think about different finance options, it is not always an easy decision. If you have the funds to buy the house it does not always make sense to tie up your capital, and many clients today consider a mortgage instead, for many reasons.
Following are just some of the reasons why people consider financing the best option when buying a property in Spain today: The interest rates are at a historic low and the 12-month Euribor remains in negative figures. Interest rates are extremely competitive in comparison to previous years and are expected to remain low for the foreseeable future, making financing even more attractive.
In general terms the maximum mortgage available is up to 70% loan-to-value for non-residents and up to 80% loan-to value for Spanish tax residents. The lower of the two values between the purchase price and valuation will be the base. This percentage can vary depending on different factors. In Spain, the maximum affordability ratio or debt-to-income is between 25% and 40%, this includes all existing debt. There are exceptional circumstances where a higher percentage can be obtained or a higher affordability ratio can be considered.
Each client and application is unique as all applicants have different circumstances and priorities, and we must take into account age, nationality, tax residence and other factors to see which are the best options at all times for each client. From personal mortgages for own investment and use to property development mortgages, the Lionsgate Capital team will help you at each and every stage of the process.
It is important to ensure the property can be mortgaged and legal advice is highly recommended (we can recommend various top law firms if required).
For each type of mortgage the rates and conditions vary between banks and also change on a regular basis. Due to the volume of transactions and our relationship with the banks and their management teams, the Lionsgate Capital team ensure they obtain the very best interest rates on your behalf, at all times.
It is not common practice to remortgage in Spain. We can however review your current conditions and see if it is worth setting up a new mortgage and canceling the existing one, taking into account all costs, including the penalties for redeeming the existing one and the set-up costs for the new mortgage.
Financing the development of a property or a refurbishment is slightly different to a standard mortgage for a spanish property. Hence we recommend strongly to first seek advice from a financing expert company such as Lionsgate Capital prior to you starting your project. As we work with all the banks in Spain, we will be able to source and arrange the best deal for:
Our team can source finance for a percentage of the entire costs of your building project (including purchase price of the plot and construction costs). We will negotiate the best conditions for you with the banks.
We look forward to offering you financing options for your new build or development, please contact us for a free consultation.
Please note: The information the banks provide us with changes frequently and we aim to update the information accordingly. If you have any queries at all, please contact our team, thank you.
We understand how complicated the process can be. That´s why our team takes care of every detail to ensure the process is easy and stress-free from the first contact to completion at the notary. We have put together a few guidelines to explain the process of mortgaging in Spain:
The duration of the process varies between banks and clients. In general terms we recommend a minimum of 6 to 8 weeks allowance, but there are always exceptions that can be made. Please contact our team for further advice and to help guide you through the process on how to apply and obtain the very best mortgage for your Spanish property purchase.
Following is a list of the documents required for the application. We have a check-list of documents for each nationality and tax-residence and also for other types of mortgage applications such as self-builds, developments and transactions in company names that we will email you after our initial conversation and based on your personal circumstances.
It is important all documents are provided in English, Spanish, German or French where possible. Following are the main documents we require for individuals looking to mortgage:
When you buy a property in Spain, it is important to make sure you are informed of all the taxes in advance. Many people are caught out by laws they are not necessarily aware of and this can result in more tax being paid. Professional guidance will prove invaluable.
In order to make sure you are fully informed, following is some information that may be of interest to you:
|From €||To €||Tax Rate %||Tax Band €||Cumulative Tax €|
The value of the property will be reduced by the mortgage in order to avoid tax payments but only if the mortgage is in place at the same time as the purchase! So, it makes sense to seek financial support at the very beginning, even if you have the funds to purchase the property.
In addition, it is difficult in Spain to release equity at a later stage, therefore it makes sense to seek for financial support at the time of purchase for various reasons:
We always recommend our clients to finance as much as possible upon completion in order to obtain all the benefits. A mortgage for spanish property is deductible when it is set up upon completion or during a short period of time after the purchase (a few months). In Spain it has to be linked to a Spanish property to be deductible for tax purposes. Banks are not as keen to set up a mortgage after the purchase, so it is always better to have it all prepared to sign at the time of purchase at the notary.
The property value taken into account for wealth tax purposes is the highest of the following three values:
The same values / rules apply for inheritance and gift tax purposes in Spain.
In properties of a higher value, not only are the savings linked to the wealth tax important, but clients must also take into consideration that with the low interest rates available today it makes much more sense to mortgage and obtain an important return on propery investment in Spain by investing the funds, with the possibility of easily cancelling the mortgage in years to come if the interest rates were to go up.
Once the mortgage is approved the bank will provide us with an estimate of all costs involved, which we will review and will include any additional costs related to the purchase. We will send you a detailed breakdown so you know the exact amount to transfer in preparation for completion. Please note as from June 2019 the banks cover most costs related to the mortgage.
In general terms, we recommend clients to estimate 10% to 14% of the purchase price for the costs, which include the following:
Following are a few examples of the breakdown of costs. Since June 2019 clients must only pay for the costs related to the purchase as the banks cover the costs for the notary, registry, administration and taxes related to the mortgage. Please bear in mind these costs are an estimate and can change as per each of the above mentioned points:
|Total Purchase Costs||€60.800||€94.050||€149.850||€205.450||€427.200|
|Mortgage costs||The only applicable costs are the property valuation and arrangement fee|
The number one benefits are the wealth tax and inheritance tax. When one person is purchasing a property in Spain for over 700.000 euros you must pay wealth tax. Wealth tax is on a scale and can go up to 3.45% per year on high-end properties. The other important tax benefit is inheritance tax which is also high in Spain. When you have a mortgage the amount is deducted and the tax is only paid on the difference. We recommend you speak to your lawyer / tax advisor to see what your personal situation is.
Nowadays most clients buy in personal names, but we do have clients that purchase in company names for specific reasons or structures they have set up recommended by their advisors.
Yes. The banks prefer purchases and mortgages are in personal names or in Spanish SL´s but we also arrange mortgages for clients that wish to purchase with a foreign company.
The age depends on the bank but in general terms the maximum age is up to 75 years of age.
Because our team is impartial and you will obtain the best mortgage to suit your needs at any given time with the best interest rates and overall conditions based on your personal preferences and requirements. A small difference in the interest rate can make a very big difference over the years, and we will help you maximize your investment.
Obtaining a mortgage in Spain can be a tedious and long process, especially when comparing several banks. As long as all the information and documents you provide are correct, we can assess your situation, define a strategy, and find you the best mortgage from all banks in about two weeks, subject to the property being valued by a surveyor. From our first meeting to completion, we estimate a 6-10 week timeframe but we can speed up the process when necessary and required.
TheLionsgate team is here to help you with all mortgage-related aspects. We can introduce you to top real estate brokers if you have not contacted any yet. We can also begin the mortgage process prior to you finding a property. The bank offers are usually valid 1-2 months and afterwards only certain information must be updated.
The affordability calculation is based on several factors and even if it is over the standard percentages we often come up with solutions. Contact us and learn more about your options.
In order for the Lionsgate team to study your mortgage followed by the banks’ risk departments, your situation must be carefully assessed. For this reason, it is necessary to provide all information for the study. However, by working with the Lionsgate mortgage advisors you must only present the documents once instead of providing these documents to each provider separately, and you will also obtain the best offer for you from over 20 top banks.
The Lionsgate Capital team specialize in all type of mortgages and financing in Spain and we are able to accommodate special requests through our extensive partner network. Please contact us to clarify your possibilities.
Yes, there are taxes, land registry costs, notary costs, administration costs, bank charges and insurances to take into consideration when purchasing a property. We typically advise our clients to allow between 11% and 14% of the purchase price to cover these costs.
These vary from bank to bank but can include home insurance, life insurance, an alarm or other products depending on the bank. We always aim to reduce the additional products to a minimum for our clients.
Yes, by law there is a cancellation fee of 0,50% the first 5 years and 0,25% thereafter. However, we also try to negotiate these fees for our clients when necessary.
Non-residents can typically borrow up to 70% of the purchase price or valuation (the lower of the two) and Spanish tax residents up to 80%.
The minimum deposit is usually between 30% and 40% of the purchase price plus the costs involved in the purchase, which are generally between 11% and 14% of the purchase price.
We always recommend our clients to have a lawyer and we can recommend excellent lawyers to suit each client´s preferences and requirements.
The valuation is carried out by a surveyor (tasador) and depending on the bank they will accept valuations that have already been carried out or will ask to arrange them directly by the bank. The client always pays the cost of the valuation and this cost varies in relation to the property.
Every client is different and the banks change their rates, products and conditions constantly. Therefore, there is no perfect bank at all times and for this reason we make sure we find the best mortgage and bank for each client at any given time.
Fixed interest rates are usually higher than the variable rates. With a fixed rate you will know what you are paying each month throughout a given time or throughout the whole term of the mortgage. With a variable rate the interest rate will be more competitive but can go up or down as it is linked to the Euribor or base rate applied. In Spain all rates are usually fixed throughout the full term of the mortgage.
In Spain the most important thing is to choose the right bank for you and that is what we specialize in. With regards to the choice between the fixed and variable rate, this is a very personal choice, we can explain the difference but the client must always make the decision.
This is the Spanish document you need to be able to purchase a property in Spain. Normally your lawyer will obtain the NIE for you. Another option is for you to obtain it in the Spanish embassy in your country of residence.
It is a report issued in the country you reside in that shows your credit history and includes any mortgages and loans you have today.
The banks will not give you the special rates and conditions we obtain and the banks you approach may not be the best bank for you. The advice of our mortgage advisors is impartial and you will obtain the best mortgage to suit your needs at any given time with the best interest rates and overall conditions. A small difference in the interest rate can make a very big difference over the years, we have the banking experience but are on our clients’ side, in addition, we work on a success fee, so you have nothing to lose and everything to gain by contacting us.
Most banks will not accept this option but there are always exceptions, please contact us and we will see if we can help.
Clients come to us in 3 different ways: 1) Without having contacted the banks and we take care of the whole process, 2) having contacted a few banks and they ask us to take over and 3) clients also come to us with the bank´s offers and we take over to improve them, in other words, all clients at any stage of the process can benefit by contacting our team.
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