Anybody who has recently tried to obtain a mortgage, either a mortgage in Spain, or a mortgage in their home country, will tell you that it´s not the easiest of processes anymore.

During the peak of the Spanish property market, lenders were falling over themselves with offers of easy and cheap credit to overseas buyers. The banks were so hungry for business in a rising property market, that they were prepared to base their levels of lending on the property valuation, rather than the property price. Any market is based on greed and fear, and if we are now in the midst of fearful economic times, then it´s certainly true that at the market´s peak, greed was the overriding factor. Buyers wanted (at least) 100% finance, and the banks were willing to provide it, fuelling a buying frenzy that saw prices of property in Spain rise by double digits year after year. The best buy in those days was the off-plan Spanish development purchase, where buyers would pay minimal deposits, fix the purchase price, and benefit from the rising market, meaning that their Spanish properties were valued at their completion far in excess of the original purchase price. Even if the maximum lending capacity of most banks was 80% of valuation, often buyers were ending up with finance of well over 100%, normally enough to cover the purchase costs and sometimes their furniture too!

Nowadays, things aren´t quite so straightforward. Valuers and lenders are gripped with fear, so valuations have plummeted and very few lenders will now base their Spanish mortgages on the valuation of a property, meaning that even if you bag a great deal or a heavily discounted Spanish property, you may not be able to secure more than 80% of the purchase price, never mind the valuation.

Gone are the laissez-faire days of P60s bought on the internet, and bank managers turning a blind eye to missing paperwork. Some Spanish banks are now cutting their lending ratios and product offerings, and even those buyers with squeaky-clean accounts are being assessed in detail before being approved for lending. Expect a 4-6 week wait for approval from a lender´s risk department, whoever you may be!