Spanish Mortgage Brokers
If we all waited until we could afford to buy a property outright, few of us would ever be living in our own homes.
Using a mortgage to buy in Spain offers the same benefits as at home: enjoying the property now and paying in stages. For investors, a mortgage will help leverage your assets and make your money work harder for you.
As a non-resident, using a specialist mortgage broker experienced in the international market will hold certain benefits. But where do you find one, how will you know who is right for you, and what will you pay?
The role of a Spanish mortgage broker
A mortgage broker acts as an intermediary between you and potential lenders. It’s their job to help you get a mortgage, based on your ability to pay and at the best mortgage rate possible.
A mortgage broker will have a comprehensive, up-to-date understanding of the market. That enables them to advise on the best mortgage products to suit your needs. They will also assist with the application process.
An English-speaking Spanish mortgage broker will be particularly beneficial for non-residents, as they’re familiar with the specific requirements and challenges foreign buyers may face and can help navigate the language barrier.
Finding a reputable broker
A good place to find a reputable mortgage broker for Spanish property is with Your Overseas Home
It’s important to do your due diligence. Look for a broker who is fully licensed. That means being regulated by the Bank of Spain (Inscrita en el Registro de Intermediaros del Credit Inmobiliario con el numero D395 Según Ley 5/2019 de 15 de Marzo). They should be qualified Mortgage Advisors in Spain (ACI) and for UK-based clients, it might be good to be licensed in the UK too (Cii – Certificate in Advanced Mortgage Advice), for peace of mind.
The usual checks as to their quality and reputation can include checking online reviews and asking for recommendations. It is in the interest of your agent that you have a higher budget, so do ask them.
Check the fees of any service recommended. A good broker will be transparent about their fee structure. They will clearly explain the mortgage process and the options available to you.
Language barrier
When choosing a Spanish mortgage broker, they may not, of course, be Spanish. There is a large international market for Spanish mortgages, with excellent brokers from all over the world working there.
The application for your mortgage and any further documentation will all be in Spanish, so an English-speaking broker will be helpful. You want clear communication with your lender. You need to be sure of exactly what is happening with your finances. Your mortgage broker in Spain will be able to translate and demystify the process for you.
There are subtleties and intricacies with any language, and with financial and legal terminology it is particularly important to have a proper translation of the true meaning of any documentation. Using an online translation service or translation app may not give you an accurate translation.
When to contact a mortgage broker
Contact a Spanish mortgage broker before you even seriously look at property in Spain, even online.
The first conversation is likely to be about what you can afford in Spain, and effective budgeting is impossible without knowing your mortgage options.
It also helps in dealings with estate agents and vendors to know you are a serious buyer with a decision in principle already in the bag.
The mortgage process
The first thing you need from your mortgage broker is an idea of how much the bank will be willing to lend and at what rate. You may believe that you know what is affordable to you, but the lender will need to decide this based on their lending criteria. A mortgage broker will go to the lenders and request a Decision in Principle based on your financial situation.
When you apply for a Spanish mortgage, the lender will assess your debt-to-income ratio from the documents you produce. You can usually get a 70% loan-to-value rate as a non-resident, but there will be buying costs to pay too.
There are no interest-only mortgages in Spain.
If you apply directly to a lender yourself, the decision to lend may be made via an automated system with limited opportunity to persuade the lender to be lenient. However, through their connections to lenders, a good mortgage broker may be able to intervene and get beyond the “computer says no” mentality. For example, if you suffered economically during the pandemic but otherwise have a good debt-to-income ratio, they could advocate on your behalf. Plus, brokers may have access to preferential rates that can change the affordability of a lender’s particular product.
If you were to go on your viewing trip, fall in love with a home, sign a reservation contract and then find out through your mortgage broker that you were unable to afford that home after all, you would lose out on that property and possibly lose money on the reservation contract. This is why it is best to mortgage broker early in your buying journey to have a true understanding of your available budget.
Fees associated with hiring a mortgage broker
Typically, a mortgage broker will charge 1% of the loan amount, upon completion. However, some brokers charge a fixed fee, while others take a commission from the lender. Always ensure the broker’s fee structure is clear to you from the outset.