The Guru Guide To Getting A Gran Canaria Mortgage

Getting a Gran Canaria mortgage

Getting a Gran Canaria mortgage

The process of getting a Gran Canaria mortgage can be long and Spanish banks have become cautious since the crisis.

However, after several years of shell-shock, they have started to lend again and competition is beginning to heat up in the mortgage market.

Getting a Gran Canaria mortgage

To get a mortgage you must have a 20% cash deposit (plus the 10% in cash that it costs to buy a property in Gran Canaria) and prove to the bank that you can make the repayments. In general, they only lend if your liabilities (existing loans, mortgage payments) represent less than 35% of your monthly income.

For example, 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 for the last 6 months
  • If you are self-employed, copies of your last 3 years of 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).

As always, you will need to feed the photocopier with your ID, residencia and the one piece of paper you didn’t bring with you. 

Banks in Gran Canaria do NOT take future rental income into account when calculating the amount of money they will lend you to buy a property.

Spanish banks currently offer mortgages of 60-80% of what a property valuation firm says that it is worth (you pay about 300 euros for this valuation as part of the mortgage application process).

Most banks offer variable rate mortgages that last from between 12 and 40 years.

2017 update: Residents can now borrow up to 90% of the purchase price from the right bank.

Gran Canaria mortgage interest rates

Interest rates in Spain vary, but are generally a little lower than in the UK. The rate is set using the EURIBOR interest rate published by the European Money Market Institute.

Your mortgage rate will be expressed as EURIBOR plus a percentage (eg. Euribor más 0.75%) and varies depending on whether the EURIBOR rises or falls. With the rate currently negative, mortgages in Spain are at rock bottom levels.

It is always worth applying to several banks (you only have to gather the paperwork once) as the rate, property valuation, and other conditions vary considerably between banks and you never quite know what headquarters in Madrid (all applications are sent to Madrid for approval) will say.

There is no harm in playing the banks off against each other.

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.

 Gran Canaria Mortgage costs

During the mortgage application process, you have to pay for a valuation by a professional valuation firm (200-300 euros) and you will also pay a gestoria (bureaucracy consultant/paperwork company) to handle all the paperwork (around 250 euros); your bank will assign one, you’ll pay for it.

Spanish banks have a habit of attaching other products to their mortgages to boost their profits. For example, you will have to pay for annual life insurance that covers the entire mortgage, and property insurance that covers its replacement value in the case of a fire, etc. Often you get the best interest rates if you agree to their add-ons.

Non-resident mortgages in Gran Canaria

Non-residents need a minimum deposit of 30% plus the 10% in fees and taxes that you need to buy a property. That’s a minimum of 40% of the value of a property befoe you can get a mortgage as a non-resident.

You may also 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.

New Build Mortgages

As well as paying slightly more IPT tax (7% rather than 6.5%), buying a new build property has the disadvantage that the constructor (builder) or promotor (promoter) often has a mortgage deal agreed with a particular bank. The rates and conditions are fixed and you have to accept them.

Changing mortgages

With rates as low as they are at the moment, there is rarely much benefit to changing your mortgage provider as the process is long and expensive (fees are around €3000). However, if you are locked into a mortgage with high rates, it is worth looking into.

The Clausula Suelo

Spanish banks used to put a floor under the interest rate on their mortgages which basically locked in their profits if interest rates dropped. However, the EU has ruled this floor, known as the clausula suelo, illegal and told the banks to scrap it and TO RETURN ALL THE EXTRA, ILLEGAL INTEREST THEY COLLECTED.

If you have a mortgage in Spain with a clausula suelo, you are entitled to go to your bank and demand that they return all the excess interest you paid over the years.

These sums can be substantial so don’t expect your bank to hand it over without a scrap; They aren’t exactly falling all over each other to obey the courts.

Rather than give you the cash, the bank knocks what they owe you off the outstanding mortgage debt.

For the latest on this story, please read this article.

The best Gran Canaria mortgage banks

Mortgage offers change all the time so we recommend that you shop around extensively and apply at several different types of bank…

  • The traditional Spanish banks such as BBVA and Santander
  • The local banks such as Bankia and / or a Spanish caja (equivalent to a building society and just as endangered).
  • A foreign bank such as Bankinter and Deutsche Bank
  • An alternative bank such as EVO.
  • Online banks such as ING Direct.

Help getting a Gran Canaria mortgage

If you speak fluent Spanish and know the local property market, feel free to ignore this advice and use a local mortgage broker or go direct to the banks.

Use a good local estate agent when you buy a Gran Canaria property: They will help you with the process of getting a Gran Canaria mortgage and make sure that you pay a fair price for your property.

Best of all, estate agency services are free for the buyer as the seller pays all their fees.

In Las Palmas and north Gran Canaria, talk to Laura at Las Palmas Property and read their guide to getting a Gran Canaria mortgage in 2017.

In south Gran Canaria, just go to Cárdenas Real Estate.


The Guru Guide To Getting A NIE Number & Residencia In Gran Canaria

Example of a green NIE paper

Example of a green NIE paper

 

All foreigners that live, do business or buy property in Gran Canaria need a Spanish NIE number.

Spain has made this harder, especially for non-EU and non-EEA  nationals. Even EU citizens don’t just get one these days.

What is the NIE

The NIE, or Numero de Identidad de Extranjeros, is the number that goes on your Spanish residency card.

It’s a fiscal identification number that allows the Spanish Government to coordinate your affairs. Note that the social security has its own number system and card.

The NIE is the equal of the NIF number that all Spanish citizens have on their DNI identity cards. But, EU and EEA citizens don’t get photo ID in Spain anymore. You can thank a group of British expats for it. They sued Spain in the EU courts for forcing them to carry ID, so Spain stopped issuing them.

This is a serious pain as Spanish law states that you have to carry your passport and NIE paper with you at all times.

What is the NIE for?

If you plan to live in Gran Canaria, you need a NIE to…

Get a job, pay taxes, own or sell property, sign a rental contract, start a business, register with the social security system and sign up for utilities, phone and internet contracts.

You also need it to claim the discount that Canarian residents get on travel. Residents get 50% of travel between islands and to Spain.

NIE or residencia?

This causes a lot of confusion because you need a NIE to be resident, but you don’t need to be resident to get a NIE.

If you are in Gran Canaria to buy a property, then you can apply for a NIE number alone. It comes on a green credit-card sized piece of paper.

If you plan to live in Gran Canaria, apply for residencia straight away.

What does the NIE look like

Your NIE number is the letter X or Y followed by seven or eight digits and then another letter. You’ll learn it pretty fast.

Currently, it comes on a floppy, credit-card sized bit of green paper. This falls out of passports and disintegrates when wet.

You’re not allowed to laminate it.

What you need to get a NIE

Spain used to assign NIE numbers to anyone who asked for one, but this has changed.

To get a NIE number these days,  you need one of these…

  • A work contract: This doesn’t need to be full-time but it does need to be formal. Currently you need a 20-hour contract to get an NIE. The days of getting a few hours teaching works and geting your number seem to be over (for now).
  • A pre-contract (contrato de arras) to buy property gets you a NIE. You get a number on a certificate valid for three or six months. The number stays with you but non-residents need to renew the certificate as needed.
  • Have at least €5000 in your bank account. an income of 600 per month and private medical insurance. The health insurance must cover you to the level  you get from the Spanish health service. However, there are no official guidelines about what qualifies you to. The decision seems to depend more on how your policemen feels on the day than anything else. Look smart and be polite; It helps.

How to get a NIE / apply for residencia

Go to the Extranjeria department of your nearest Policia Nacional station, (Plaza de la Feria in Las Palmas). Fill in and sign an application form (take a pen). Hand it in with your documentation, a passport photocopy and your original passport.

Then you have to go and pay a fee at the nearest bank  and bring back the receipt. You may get your NIE card on the day or have to come back in a few days to pick it up.

EU citizens now have their own queue at extranjeria in Las Palmas with short queues. Spare a thought for everyone else as they sometimes wait weeks for an appointment.

For a NIE certificate, you may need your hotel booking receipt or proof of address.

For residencia, you may need your rental contract or a paper showing your current address.

Getting your NIE at home

If you qualify, you can get your NIE before arriving in Gran Canaria. Phone your nearest Spanish Consulate as procedures vary depending on the country.

Renewing your NIE

The little green cards with NIE numbers don’t expire and the number never changes so you shouldn’t need to renew your certificate unless you lose it. If you do lose it you may need to justify that you still need it and quality al over again.

How to change a NIE

Once you get an NIE number it never changes. But you can change the name on your NIE paper (if you get married or divorced for example).

  1. Passport
  2. Document accrediting the change on your NIE. For marriage, you need a British consulate certificate explaining th custom of changing names.
  3. Receipt from the bank stating you have paid the relevant tax. (get the form when you meet the officer for the first time, pay it at the nearest bank and return.
  4. Social security certificate.

Note: Changing your name causes confusion within the Spanish government and Social Security system. Avoid doing it unless you really love your new partner or can’t stand the old one.

For more info on moving to Gran Canaria, get this ebook: Gran Canaria Living.