A mortgage is by far the most common way to purchase property, but
how do things differ here in Mallorca when it comes to financing?
We've compiled some general information
regarding mortgages in Mallorca, however, we strongly recommend you receive
independant advice from a qualified mortgage broker or high street bank to
discuss your individual circumstances and options. We have
reliable contacts and would be happy to put you in touch with someone
who specialises in this area.
important...
Receiving financial advise
regarding the purchase of a property should be high on your priority list
as it gives you a clear idea of what you can realistically afford and also shows
the seller that you are serious buyers. Please remember that you do NOT
need to have decided on a final property before seeking advice and getting a
banks offer of mortgage costs absolutely nothing. And what's more, once
you have decided on a property it allows you to move quicker and more
confidently to the next stage of the purchase
process.
how much can i borrow?...
In general, the
maximum mortgage loans for non-residents are 70% of the property valuation and 80% for Mallorca residents. In
practice however, it is possible that both non-residents and residents may be
able secure a little more including 100% loans, although this is usually only
available for residents.
As with all loans, financing
is subject to status and in general a good rule of thumb is to remember that
repayments should not exceed 40% of your net monthly
income.
Age can also be an issue. Most lenders will offer a term that is no longer than the number of years until your
65th-75th birthday, in the case of joint applications, the age of the youngest
of the two applicants is normally used. As this can affect the net monthly
income, it is important to remember this could ultimately affect how much you
can borrow. (Different lenders have different terms concerning age so contact
the lender for clarification regarding
this).
Apart from spanish mortgages there are other mortgage options which you may wish to consider.
other options...
Financing could be obtained by
taking out the loan against other assets/property you may have here in Mallorca or
elsewhere. However, care should be taken if the loans are in another currency.
Movements in exchange rates could have a huge impact on your investment and
repayments. It is usually recommended to keep the new loan and any assets
secured on it in the same currency. There are currency specialists to help in
situations where mortgage loans and assets are in different currencies and these
companies can fix an exchange rate for up to 2 years.
mortgage terms...
the following terms are available amongst most mortgages:
Non-residents can expect loans of up to 80% of the valuation price, however, some lenders may restrict the
amount to a percentage of the purchase price. Mortgages on rural property are
often limited to 70% of the valuation.
Self Certification mortgages are available for 50% of the valuation with a maximum loan of 550,000 euros.
Interest rates are usually variable, however, fixed rates (often slightly higher) or a mix of fixed and
variable rates can be offered.
Length of mortgages can vary, the normal being 30 years but can include a maximum of 50 years.
Financing is available for borrowers up to age 75 with some lenders offering an unlimited age.
Re-mortgages are available.
Loans can be taken out in both individual or a company name.
required
documents...
most banks/brokers can issue a mortgage quote with come basic information, however, ,should you wish
to make a formal application further documentation will be required. Below
are the documents commonly requested by lenders, although additional documents
may be required. It is advised to gather the appropriate information and
forward on to the lender as early as possible.
you - the applicant &
co-applicant
copy of passport.
copy of NIE number (an NIE number is the equivalent to the UK National Insurance number). Obtaining an NIE number is simple and costs very little. Should you need help with this, please contact us.
Information on any properties owned in spain and the deed of purchase ("escritura de compraventa")
the property
The deeds (escritura) and any other documents to the property you wish to purchase. For new builds, a copy of the Town Hall completion Certificate is also required.
Any contracts that have been signed or intend to be signed regarding the property purchase, especially the Land Registry details.
Copy of the Land Registry document (Nota simple) and should be no older than 3 months.
employed applicants
P60
Last 3 pay slips
Bank statements from past 12
months
self employed applicants
Bank statements for past 12 months.
Tax returns for last 2 years or last 2 years annual accounts for company application.
Letter issued by your accountant confirming Net Profit projection for the comming year.
directors
P60/Tax return
Last 3 pay slips
Bank statements for past 3 months showing received salary.
Bank statements for prior 24 months showing any declared dividends received.
Last company accounts
We are here to help with every aspect of your purchase, we can refer you to a highly professional and independant mortgage advisor -
it's a free consultation and one definately worth taking advantage of. Please contact the office for more details.
