Many British buyers take out Spanish mortgage as interest rates are generally much lower than in the UK and as the market has become more competitive. Here are some things to know if you are considering buying a house in Spain arranging a Spanish Mortgage.

BASIC ASPECTS OF THE SPANISH MORTGAGE

When applying for a mortgage in Spain, a valuation of the property can be necessary as the loan is granted as a percentage of valuation or purchase price. Maximum loan to values are mainly 70% reducing this to 60% for non residents of Spain, or applicants living outside the EU. Maximum terms range from between 20 to 30 years. Age restrictions do apply which can vary from Bank to Bank and range from age 60 years to age 80 years.

In order to gain the mortgage, most banks will consider your net income as a general criteria. Your monthly outgoings on loan and debt payments will need to be less than 35% of your net income. Some other banks will ask for minimum earning levels.

TYPES OF RATE LOANS

Standard repayment loans are the main product in Spain and they are declined in different types of rate. Fixed rate loans that allow a better planning are not offered by all Banks and their prices are much higher compared to the variable rate. Fixed rate loans also have higher early redemption penalties. Variable rate loans offered in spanish banks are usually linked to the 12 month Euribor. They are reviewed once a year against prevailing Euribor at review date.

HOW TO CHOOSE A SPANISH BANK

As most loans offered in Spain are variable rate loans, the main difference between banks is the margin they offer above Euribor. Do not accept the first offer. Negotiate with other banks, they will often try to improve their rivals prices. Other differences that exist between banks are early repayment penalties and the Bank opening fee (range from 1% to 2% of loan amount).

COSTS OF COMPLETING ON A SPANISH MORTGAGE

Apart from the previously related Bank opening fee you will have to expect the following costs:

• Notary and land registry fees for mortgage deed
• Mortgage deed tax known as Impuesto de Actos Jurídicos Documentados (AJD) around 1.8% of lending. It may vary form region to region.
• Valuation fees average 0.10% of value

source:  http://www.thespanishproperty.com/blog/some-advices-for-your-spanish-mortgage/