Getting A Mortgage in Spain

For all of its structural weaknesses Spain is considered one of Europes leading economies. Located on and north of the Gibraltar Straight, Spain is constituted through a center right government and runs a mixed economy. In fact, Spain is one of the only countries within the European Union that was able to avoid zero percent growth in recent years. Although there is a variety of industry within Spain it is its tourism industry that is most impressive. Over the last 40 years the country has grown tourism into the second largest in the world while generating almost 40,000 million Euros in the process.

Unfortunately, the successes found within tourism cannot be translated into the mortgage market where pricing pressures have left younger buyers scraping by to meet payments or rents. Current loans that are available include:
For purchase (including land)
Re-mortgage
Interest only
Self build
Variable
FixedNon-status loans are available
Up to 30 year interest only available
Commercial loans

Even with a low interest rate of 3.5 percent as an introductory offer and then 4.25 percent there after it is the loan to value conditions that help to make decisions. Although vary strictly monitored and designed to keep people in Spain ,or move there, loan to value conditions include:
Based on land valuation
E180,000 loan to value based on 95 percent loan to value and the intent to become a Spanish citizen.
No maximum loan amount for up to 70-80 percent of loan to value amount
Equity release of up to 60 percent of loan to value
Self certification of up to 60 percent of loan to value

In most respects even the term of the mortgage is generous at 40 years. The age limit is fair as well at 75 years old. There also is no limit on the 30 year interest only product if higher interest rates are in place. Documentation is fairly straight forward and includes, at the minimum:
Six months of bank statements
P60 or equivalent
Letter from accountant indicating taxes paid
Three years of audited accounts if self employed
Certified true copies of passports
Two forms of address identification
Completed application form

Despite Spains remarkably strong economy, which is thought to be able to overtake Germanys per capita income levels in the very near future, its debt level within the younger and poorer populations may derail mortgages, growth and investment. Recently Spain has been partaking in the global housing boom with 16 percent of GDP being comprised of construction. Unfortunately, investment in education, research and development have been underperformers in recent years causing a loss of manufacturing jobs to lower cost countries. But if this were not enough, Spain has been ranked the worst educational system in the European Union. Perhaps the bubble is about to burst and it will fall to tourism to save the day but, at the moment, Spain is on the move and awaiting anybody that would like a mortgage.

November 2, 2008 | Filed Under Finance

 

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