Mortgages in Spain and COVID-19

Apply for a mortgage in Spain

Mortgages in Spain and COVID-19

The current times are worrying for everyone around the world

During the last weeks we have had several telephone calls from Spain lovers about mortgages. People who had a home in mind or had the idea to purchase a home in beautiful Spain within a certain period. To be used as a holiday home, as a main residence or as a rental home. People who have been dreaming of moving to Ibiza after their retirement, young families who wanted to buy a holiday home in Marbella, you name it. Usually they asked us whether the banks are open at all, whether the notaries are working or whether we could help in the mortgage process during these COVID-19 times. The answer to this is “yes”! Everything just continues, although it is a bit slower because many bank employees work from home and the notaries often only work by appointment.

Feasibility test

One of our services is making a feasibility test, our Mortgage Quick Scan, for our customers. This is the first step where we can calculate within 2 days what your maximum mortgage in Spain can be. If you do not have a house in mind yet, you will know in which price range you can search based on the outcome of this test. If you have already found your dream home, we can calculate what is possible and what the monthly costs for the mortgage would be. Your file will be presented to the bank completely pre-chewed (we only present those files of which we are sure that there will be acceptance from the bank).

Your documents do not need to be translated

You read that right! We do this free of charge within the application for your mortgage in Spain. This is an exclusive service from WeCare Mortgages. You do not need to have the documents translated, which saves you a lot of money! Thanks to the experience of our mortgage specialist Martin – he was a bank manager at Banco Sabadell – we know exactly which documents are needed and how to explain them to the Spanish bank so that their Risk Department approves the file. WeCare Mortgages is aware of all laws, rules, regulations and options offered by the Spanish banks.

Arrange your mortgage application yourself?

The price of our Mortgage Quick Scan is € 100 and is without any obligation.

It is also possible that you go to the bank yourself for a mortgage application. Most banks require you to have all documents translated. Then you will have to negotiate interest rates, bank commissions, life insurances and notary agreements yourself. We know from experience that you will not hear from the bank for weeks and that is why it may just be that the house you had in mind was hijacked in front of you!

On average, we receive the final approval (not the provisional one!) within 10 – 12 working days. The banks have known us for more than 15 years and know that the mortgage applications that come from us are perfectly in order and ready to receive approval.

Most notaries are currently open, often with shortened opening hours, for signing mortgage deeds. The appraisers also offer their services where necessary and always in accordance with the required conditions in the Corona policy.

Certificate

Our mortgage advisor has obtained his LCCI certificate, as required by the new Spanish mortgage law. He will provide neutral advice and will negotiate on behalf of customers with the banks to obtain the best deal. Nowadays we see mortgage advisers who introduce the customer to a certain bank and from that moment it is the bank itself that has contact with the customer. With all its consequences; you will get the mortgage that the bank chooses with expensive products with fine print.

Expectation

We hear from our network of lawyers and brokers that they expect that after this crisis there will be a wave of foreign buyers who will flood the market. House prices are likely to drop slightly soon. Potential buyers will come straight to Spain whenever possible with the aim of purchasing a home. That is why it is useful to go to Spain prepared. If you know in advance exactly what your maximum mortgage can be and what your costs will be, you can purposefully search for a home. And once it has been found, it is nice and soothing for all parties involved to know that the mortgage is arranged for.

Our mortgage adviser will have your file completely ready with the necessary documents and papers that the bank needs for the application. You have already been able to collect and request this back home. Once in Spain you can only focus on finding a suitable property instead of worrying about whether you qualify for financing. You also have a stronger negotiating position and your down payment is insured. Due to the excellent track record with the major Spanish banks, we can negotiate exclusive conditions. So, be well prepared. We take all your worries off your hands and are a transparent party. Would you like more information about taking out a mortgage or do you have other questions about the mortgage process? Please do not hesitate to contact us on +34 952 26 30 23.

Everything about the NIE number

A very important document in Spain is the NIE number. This is the Spanish identification number for foreigners in Spain (Número de Identidad de Extranjero) and is similar to the fiscal ID number in your home country.

You will need this document when you buy property in Spain, when you stay in Spain for more than three months, if you emigrate to Spain and actually for everything that involves a tramite or official process in Spain.

A few examples for which you will need a NIE are:

– Contracting supplies, like water, gas and electricity
– Registration in the municipality
– Establishment of a company
– Registration as an independent entrepreneur
– Taking out an insurance policy

Where can I apply for a NIE number?

Please keep in mind that dealing with the Spanish bureaucracy is often a frustrating affair. It happens many times that the same rules are interpreted differently the various regions in Spain.

There are several ways to apply for a NIE number:

National Police office
At the department foreign services of the national police in the area where you are staying or where you want to buy your Spanish home, you can apply for a NIE number. In some areas you need to go in person to the police office to make an appointment for this. On the second visit you do the application and on the third visit you can pick up your NIE number. In other areas you can just turn up and get everything done in an hour; it all depends in which area you apply but also which officer is attending you…

Through a lawyer or gestor
You can also let someone else apply for your NIE, like a lawyer or gestor. With an authorization (power of attorney) they can arrange the NIE number for you and this way you save long waiting hours and trips to the police office.

Via the Spanish Embassy in your home country
The fastest way to request a NIE number is via the Spanish Embassy in your home country. For more information please contact f.e. the Embassy in London.

Please note that there could be a long waiting list before you can make an appointment. We advise you to apply for your NIE number well in advance to avoid delays in the purchase and mortgage process in Spain. The advantage is that the application through the Embassy is cheaper, efficient and with the minimum bureaucracy.

What to look for in a mortgage application in Spain?

Taking out a mortgage in Spain is quite possible with the right preparation and guidance. It is wise to seek advice from an experienced agency who takes out mortgages for foreigners on a daily basis with Spanish banks. For example when you do not speak or understand the Spanish language well, when your situation is ‘complex’ as entrepreneur or if you are completely unfamiliar with mortgages in Spain.
Also to avoid surprises and expensive by-products we recommend you to go to a mediator who is experienced and has built a trust bond with the Spanish banks. Generally speaking you can say that there are five important points to be taken into account if you are considering to take out a mortgage in Spain.

The following points are of importance:

1.Maximum 70% finance
Spanish banks can finance up to a maximum of 70% of the purchase price, excluding the costs. 100% finance is not possible in Spain. If the valuation is lower than the purchase price, this lower value will be taken as a base for the 70% mortgage. Please keep in mind that you have to pay 30% plus the cost of the buyer.

2. First arrange financing, then the purchase
It is very advisable to arrange your financing before you sign the reservation contract. If there still is no clarity about the financing and you wish to sign the reservation contract, then ‘ subject to funding’ should be included so you get the time to settle the mortgage. However, in practice, it appears that in Spain a “subject to funding” is almost never included.

3. Book your flight after the mortgage is arranged
Book your flight tickets only after you have security that your mortgage is 100% approved and after the valuation has been done. There are several parties involved in a purchase process, thus it is possible that the bank cannot reach the desired schedule. Patience is a virtue here and in the end everything will turn out well.

4.Rustic or urban residence?
Please check if the property you want to buy is rustic or urban. The Town Hall classifies every property according to rustic or urban features and both have different regulations. This is important to know because many Spanish banks do not finance a rustic property or they give a much lower mortgage. We recommend you to check this beforehand to avoid unnecessary confusion and delay in the purchase procedure.

5.Conservative valuation values
It is obligatory to carry out an appraisal when applying for a mortgage and the values can be conservative. The Spanish banks cooperates with accredited valuators who are registered at the Spanish Central Bank (Banco de España, BDE). These valuators are supervised by the BDE and are the only ones who may carry out valuations for the Spanish banks. Nowadays they are more careful with issuing values and it is very possible that the valuation may be lower than the purchase price even if the purchase price of the house was higher and you think you have negotiated a good price. Don’t be disappointed, in most cases the appraisal value will be close to the purchase price.

Where should you look for when you buy a house in Spain?

We give you three tips when buying a house in Spain:

1. Ask the broker if he has contacts for legal guidance in the purchase of the home. It is important that all costs up to the time of purchase have been paid by the current owner. Also the existing mortgage has to be cancelled, or maybe it is interesting to take over this mortgage. Our advisers can sort this out for you and assist you in this matter.

2.Make sure that all owners of the property are aware of the sale. Sometimes a property has multiple owners, for instance when the house is part of a legacy which several children have inherited. If one of the children is not aware of the sale, the transaction at the notary cannot continue. Ask your broker to find this out correctly.

3.Let your broker or lawyer check if everything you buy that belongs to the property, is also registered. If you buy a house with annexes and a plot of land, it may happen that the valuator of the bank that provides the mortgage, discovers that part of the property is not registered. This can affect the amount of the mortgage and cause unpleasant surprises.

Quarterly payments of interest and capital

The banks we collaborate with can offer you the possibility to pay the interest and capital per quarter. This may be interesting if you have a variable monthly income. Contact us for more information.

‘Subject to mortgage’ in sales contract

In the Netherlands they are studying a legislative proposal to include ‘subject to mortgage’ as an obligation in sale contracts. In Spain ‘subject to mortgage’ is usually not applied. If you have made a down payment and you finally cannot buy the property, you risk losing the deposit. It is therefore very important that you first do a mortgage scan before you buy a house that you wish to finance with a mortgage.

The Mortgage Quick Scan of WeCare Mortgages

Have you found your dream home but you do not know yet whether you can get a mortgage? Or would you like to know your budget, before you make a trip through the Spanish countryside with your broker? Then do the mortgage scan. On our website you can fill in your details and we will contact you within 48 hours to check your possibilities in obtaining a Spanish mortgage. You will quickly know the maximum mortgage you can get.

What is an Interest Rate floor Check?

To judge whether you have signed in the past an interest rate floor and if you are entitled to compensation of overpaid interest, we will study your mortgage deed and will make an approximate calculation of the compensation amount.

Know more?

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Who are we?

Since 2004 Hypotienda assists foreigners in all mortgage and insurance matters in Spain. During the last few years we have with a dedicated team of mortgage advisors and are developing further with our international customers. Since the beginning of this year, the mortgage service of Hypotienda will continue under the new name of: WeCare Mortgages.

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 Do you have a specific question?

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Tel: (0034) 952 263 023  – info@wecaremortgages.com

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Overpaid mortgage rates Spain

Do you have a mortgage on your Spanish property?

Mortgages that have been contracted in the past almost all have a variable rate. As you may have read there is a lot of debate about the floor clause, in Spanish called the ‘Clausula suelo’. This floor clause is also known as the bottom-or tunnel clause. Spanish banks have set a minimum interest rate in the past so that the mortgage rates could not fall below a certain threshold. This way mortgage customers cannot fully benefit from low interest rates. Mortgage customers have protested and it seems that banks have to pay compensation. There has been a ruling from the European Court of Justice on 21 December 2016: the Spanish banks have to refund the overpaid mortgage rates.
Before all of this will be done, we recommend you not to accept alternative offers from your bank. Otherwise, you may use your right for compensation.

Are you entitled to receive compensation for overpaid mortgage interest in Spain?

Ask us for a Floor Clause Check. We will study your Spanish mortgage Deed to find out if you have signed for a minimum interest rate. We will make an approximate calculation of the overpaid amount and will indicate what steps need to be taken to get compensation.

Many foreigners in Spain do not know about this floor clause (bottom clause/tunnel clause). Please be well informed. We are happy to help you. Please contact us.