The Spanish mortgage market is currently changing on a daily basis.

Most banks worldwide seem reluctant to lend anything to anybody, but here in Spain, people are still getting mortgages. Here is an update on the current situation.

Nowadays, the screening process for applicants for a Spanish mortgage is much tougher. Gone are the days of the relaxed attitude of most Spanish banks. Nowadays, they want to see paperwork….and lots of it. You will need payslips, accounts, P60s, bank statements and credit reports. And once you have submitted these to the Spanish banks, don´t expect a speedy decision – the banks are taking their time, and understandably so – the risk departments want to make sure that your proposed property investment in Spain isn´t going to end up on their list of toxic debts!

So, gone are the 100% mortgages in Spain, and in their place we now have a new, stricter mortgage market. As a non-resident, but with squeaky-clean paperwork, you can expect to be able to borrow up to 70% of the purchase price of your Spanish property. Bearing in mind that purchase costs and mortgage costs will amount to around 12%-13% (depending upon the amount of the loan required), a prospective buyer will need to find at least 42% of the purchase price from elsewhere.

There are also one or two banks that will lend up to 80% of the purchase price if the valuation is suitably high, meaning that the required capital outlay would be around 32% instead.

Banks are willing to lend on an interest-only basis in the short-term, but are less willing to do so if the level of borrowing starts to exceed 60% of the purchase price. In addition, the more attractive products with the better repayment rates tend to be available for those borrowers seeking a mortgage of 40%-50% of the purchase price.