Mortgages in Gran Canaria
Mortgages in Spain are similar to UK mortgages, the main differences are that most offers have variable interest rates and can last up to 40 years.
Getting a mortgage
To get a mortgage you must prove to the bank that you have the ability to pay and in general they will only lend if your liabilities (existing loans, the mortgage payments) represent less than 35% of your monthly income. I.e if you want to take out a mortgage which will be 350 euros a month, you must earn 1000 euros a month and not have any other loan payments. They will check your ability to pay by requesting the following documentation
- wage slips from the last 3 months
- bank statements of the last 6 months
- or, if you are self-employed, copies of your last 3 years accounts (with an auditor's stamp) and copies of you last 12 month's business bank statements and your last 6 months personal bank statements).
If you are intending to rent out the property proof of payment based on your ability to pay with income received from renting the property will NOT be taken into account by Spanish banks.
If you are not a legal resident in this country, then you may be asked to provide an aval (guarantor). This will be somebody usually based in Spain who agrees to pay in the event of you being unable to.
Interest rates
Interest rates in Spain vary, but are generally at the moment (2008) are a little lower than in the UK, and competition between Spanish banks is fierce. If you are interested in a property still to be built, you may find that the constructers already have an agreement with a certain Spanish bank for all mortgages and you are left with little choice. If not, you would be wise to shop around for the best deal. Mortgages are based on the European base rate (Euribor) and you will often see offers such as Euribor + 0.75% which means the Euribor interest rate + 0.75%, it is obviously a variable rate for the life of the mortgage.??Shop around for mortgages and don't accept the first offer. Ask for a copy of one bank's offer and then take it to a different bank to see if they can improve the offer - they often will. Then take the improved offer back to the original bank - you may get a pleasant surprise!! It can be worth using services such as Orange Finance, which do exactly that on your behalf.
Most Spanish banks currently offer mortgages of 60-80% property value (NOT the price you pay, but the value they put on it, which is usually less than you pay) over 5 to up to 40 years depending on whether you are a resident here or not. Some banks offer 100%.
Mortgage offers change all the time, have a look on the Internet and shop around, for a list of the main banks in the Canary Islands have a look at our list of banks in the Canaries.