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What is a mortgage?

A mortgage is the most common way to finance a property if the buyer does not have the full amount of the purchasing price.
The mortgage is a contract between lender and borrower to ensure the borrower will repay the debt. On mortgaging a property, the loan is secured on the property being bought.

To obtain a Spanish Mortgage

Spanish mortgages are available from most of the major banks on the Costa del Sol (also from UK and Gibraltar banks). Note that many new properties under construction on the Costa del Sol are already mortgaged by the developer as a means to raise capital to fund the construction. A purchaser, under the direction of a Spanish lawyer, can take over such a mortgage when purchasing the new construction. In this case the mortgage may be up to the value of 80%. In some cases resale properties are also offered for sale with a mortgage in place. Your lawyer should check out the terms and conditions applying to the mortgage, and advise you accordingly. Mortgages in Spain are attached to the property and written into the title deeds, so it is most important to use a Spanish lawyer who is familiar with this, as the mortgage is on the property and not the person who takes out the mortgage.

Cost of arranging a Spanish mortgage for property in Spain

Unless you are purchasing a property in the Costa del Sol with a mortgage already in place, the cost to arrange a mortgage will be around 1% to 1.5% of the amount advanced.

Amount to borrow

As a general guide a non-resident will be able to borrow around 60% of the valuation of the property. Residents can borrow around 80% of the valuation.

Interest rate

Interest rates will depend on the currency in which you choose to borrow. Interest rates for mortgages in euros are based on the Euro Interbank Offered Rate, (EURIBOR). The lenders rate will be a margin over Euribor, generally Euribor + 1.25%, but certain lenders may fluctuate on this. Fixed rate mortgages are available at slightly higher interest rates. For more information on EURIBOR, go to http://www.euribor.org.