Spanish Mortgage Guide 2022 - Foxes.esPosted by Liz Seyi on June 19th, 2022 This Spanish mortgage guide has been created to outline how a potential applicant(s) should approach their mortgage journey. The timelines and steps are laid out based on our experience here at Foxes, and we hope this will help people through the purchase process. Whether you use a qualified and regulated broker like us, or choose to approach Spanish banks independently, this should help you understand the process and what to expect. Let’s start with the timing side of things: 1 – Timing and Criteria This is not the UK, USA or Switzerland. Spain is a fantastic place to live, reside and visit, but like many Mediterranean countries the pace of many things – including paperwork – is slower. Be aware and manage your expectations. An agreement in principle can be delivered in a decent time frame (a week is usual) however a full set of paperwork will be required and possibly more documents may be asked for throughout the process. This is true of all lenders and one of the main reasons people use a broker to manage the case for them. When to apply Following the right sequence of steps helps to make it a seamless and straightforward experience. Preparing the required information in advance facilitates this and avoids any issues further down the line. View our timeline of steps for obtaining a Spanish mortgage. It is not advisable to start the mortgage process after locating a property. Start early and be prepared prior to travel (if you are based overseas). By securing an AIP (Agreement In Principle) in advance you’ll know upper lending limits and the terms of the loan in good time. Use our Spanish Mortgage Calculator to work out your costs It is important to plan/coordinate a mortgage application so it coincides conveniently with the property purchase and does not slow the process down. An AIP usually is valid for 6 months, though the lender may request updated payslips and bank statements as time passes. How does the bank ascertain if I qualify? Each bank has slightly different procedures and lending criteria, but those listed below universally apply to the qualifying of non-residents:
2 – The next steps Once the financing is in place and you receive the API you are in an ideal position to move forward with the property search and start viewing houses. Be aware that the AIP is based on your financial situation – the ability for you to repay the loan. Properties can have licensing problems, debts, or issues with how they are registered. They can be rustic (lower LTV of 50%) or have had extensions that have not been updated in the land registry. You have the AIP, and the property search can commence but make sure you get a good lawyer. Usually, people use estate agents to find properties. Once you’ve seen the property you wish to purchase a deposit will be requested. Before any money changes hands make sure you are protected. The reservation agreement should take into account: The legal status of the property The lawyer you appoint will confirm that the property is exactly as described by the vendor/agent and that there are no outstanding debts against it. The valuation of the property The bank will appoint an independent and BoE (Bank of Spain) approved valuation company to officially value the property, confirming also its m2 area and condition/state. The resulting report is sent to the bank’s risk department, which then prepares a binding offer. A month is usually long enough to ensure all checks and valuations can take place. If the legal checks and valuation are satisfactory then you can proceed to paying 10%. The private purchase contract or ‘arras’ contract once signed means you are committed to buying the property. Be sure before paying that the above steps have been taken otherwise the 10% will be in jeopardy. In contrast, if the seller pulls out, they have to pay back 10% plus an additional 10%. An agreed date of completion will be contained in the contract and the bank will be notified to create their binding paperwork. 3 – Binding Paperwork There will be contracts and data protection documents drawn up by the bank. The FEIN (Ficha Europea de Información Normalizada) will describe the terms of the mortgage as laid out in the AIP within a binding document, which once signed are sent to the Notary for the preparation of the Acta Privia – the document used to explain the mortgage process and terms, and ensure the buyer understands them in full. The buyer is given a period of reflection – usually 10 days, but up to 14 days in some parts of Spain – before signing. Work this into your timings as the wait time is mandatory and only once it’s been observed can you sign. Completion
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