Investing in property on the Costa Blanca
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Building your own home
Pepe Marti Grimalt takes you through the steps of getting a mortgage in Spain
Purchasing a home in Spain does not have to involve a great financial effort or difficult arrangements.
But how does a mortgage loan work?
The procedure to obtain a mortgage starts at the precise moment of choosing your new home. Very often, in the case of new buildings, a mortgage loan has already been granted to the developer. When buying a new house, you automatically take over that mortgage, which makes the whole process much easier.
Otherwise, a mortgage loan application requires taking several steps which are compulsory according to law.
The first step is having a valuation of the property done. The valuation must be carried out by an official and independent company in order to guarantee the truthfulness and transparency of the CALCULATED value.
The valuation price will be used AS A STARTING POINT TO ESTABLISH THE LOAN’S AMOUNT, THE SUM TO BE INSURED AND, IN THE EVENT OF NON-PAYMENT, THE VALUE OF THE POSSESSION TO BE AUCTIONED.
Should the bank consider it appropriate, it will grant a mortgage loan to the purchaser of up to a maximum percentage of the property’s valuation price. This percentage will depend on several factors (type of property, location, first or second residence, financial situation of the applicant, etc.) and obviously also on the bank’s policy in this respect.
Once the mortgage has been authorized by the bank, you will have to go to a notary public to sign the purchase and mortgage loan agreements (this kind of loan requires the involvement of a legal representative who guarantees the transaction’s transparency as well as the fulfillment of rights and obligations by all parties concerned).
The notary public will certify that all details are correct and will make sure that no seizures or burdens have been placed on the property so that the mortgage loan can be processed and the bank will eventually be able to recover the amount lent.
These guarantees and rights as well as the property’s ownership will be finally entered onto the relevant Land Registry. This Registry keeps a document of each property and that shows all its history such as the year of construction, any obligations pending, transfers, seizures, heirs, etc.
Moreover, there are a great choice of loans from a variety of lenders so that you can always find the mortgage which best adapts to your needs.
Just to name a few examples:
Hipoteca Ocasión: you will obtain special financing conditions for the purchase of your home at a very low interest rate and with a repayment term of up to 30 years.
Hipoteca Combi: this is a much more flexible and convenient mortgage since from the very beginning you will have a credit line which can be used for anything you wish: furniture, a car, a holiday, etc.
Hipoteca Exclusiva: this loan offers you those conditions which best suit your circumstances. It can be used for the purchase of your first or second residence or even to better the mortgage loan you have with another bank. Moreover, you can choose between a fixed or a variable interest rate.