Spanish Mortgages General Info

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Spanish Mortgage Guide General information

Spanish Mortgages Home Page
Spanish Mortgages General Info
Full Status Mortgages
Self - Cert Mortgages
Property Valuation For Mortgage Purposes
Personal Identification
Equity Release
Property Identification
Approval in Principle
Mortgage Products
Final completion at the Notary
Registration of the property and N.I.E.number
Mortgage fees and taxes
Spanish Property Taxes

Spanish mortgages in General

There are two main categories of customer “Full Status” and “Non Status”. Most banks in Spain will only work with “Full Status Customers”, but there are now some who will also offer Spanish mortgages to “Non Status Customers”. The difference
between status and non status is in the ability of the customer to verify to the banks satisfaction their ability to make the repayments. A full status customer will be able to provide good supporting documentation that verifies income and current liabilities and the customer will have no bad credit history. These full status customers can get the best deals, lowest interest rates and higher LTV; that is a bigger percentage of the property value will be provided as a mortgage so the customer puts in less cash. Currently “Full Status customer can get up to 80% of the valuation of the property. The “Non Status Customers” do not have to verify their income with documentation. No income verification and a bad credit history will mean they get less LTV and possibly have to pay higher interest rates. Typically at the moment, for non status the LTV is 65% of the value of the property. Although the non status customer does not have to verify their income the bank will still want to be satisfied that the customer can make the monthly repayments and will ask the customer to confirm in a statement that they have sufficient income to maintain the mortgage. This statement is known as “Self Certification of
Income” a mortgage on this basis is generally referred to as a “Self Cert Mortgage”.

Spanish Mortgage Misconceptions

Most people believe that if a bank has adequate collateral then they should lend the money irrespective of the customer’s ability to make the monthly repayments. This is just not the case. The most important part of a mortgage for a bank is NOT the security provided by the house but the monthly repayments. A bank’s preference is that the payments are made on time and for the full term of the mortgage. A bank will monitor their mortgage customers’ repayments and if they accumulate a lot of bad payers and a lot of repossessions then the bank will be unable to continue in the mortgage business. The monthly repayments are more important to the bank than the security of having the house as collateral. Ideally the bank would like to see the agreed monthly payments made over a long period of time, the longer the better, so a 20 year mortgage is more attractive to a lender than a 5 year mortgage.