Mortgage from a Spanish bank
When you buy a property in Spain, it is worthwhile to consider the possibility of taking out a mortgage from a local bank. The interest rates are favourable and it is possible to have the loan period extended until you are 70 years old (the maximum loan period is approximately 25 years). The security for the mortgage is the property you are buying. Therefore the bank ensures that all possible previous encumbrances on the property are paid and that the purchase is registered correctly at the Property Registry.
When you apply for a mortgage you need to have the following documents:
1. Passport, residence card or NIE number (the original document).
2. Tax declarations or pension income of the last 2 years.
3. The three last payslips/pension receipts.
4. Information about other loans/mortgages in Spain (the amount of the monthly payments).
5. Property: E.g. the value of the property (your own valuation), savings, investments in funds, shares and/or retirement pension insurance.
6. If you are self-employed and the major part of your income is profit distribution from your company, you need to have the profit and loss account, the balance sheet of your company and the extract from the trade register.
Even though the property you have in your home country cannot guarantee your mortgage in Spain, it is advisable to present all the documents concerning your wealth. The savings and the unencumbered property is a sign of a person's solvency and can be of great importance when you are applying for a mortgage.
Some banks require this information translated into Spanish. The bank makes its own valuation of the property.
Within days the bank normally gives you a preliminary estimate of the mortgage on the basis of the information provided.
Before granting the mortgage the bank wants to do its own valuation of the property. The mortgage is calculated from the lowest value of the selling price and the bank valuation. The exact amount of the mortgage is given when the bank officially has evaluated the property. Depending on the bank and the date, the valuation process takes from a few days to a few weeks. The mortgage normally is 50-70 % of either the value of the property estimated by the bank or of the purchase price.
The whole mortgage process takes from two weeks to one month depending on work and procedures required as well as the requested amount.
When purchasing a property with a mortgage there are two Title Deeds to be signed before the Notary, the Title Deeds of the purchase (escritura de compraventa) and the Title Deeds of the mortgage (escritura de hipoteca).