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Banking and Finance FAQs

VIP Almeria has been working with banking institutions such as Bankia, Bankinter, Sabadell and Cajamar to get the best options for our clients:

There has been some big improvements regarding mortgage conditions for FOREIGN CLIENTS MORTGAGES. 
Please see complete conditions below. 


FINANCE TO CLIENTS 

Banks are definitely financing to non-resident clients in the purchase of their house in Spain and we have transparent information presented from Jose Francisco Castaño Torres form Banco Sabadell Mortgages - CastanoJ@sabadellsolbank.com 

The terms of finance as an Example: 

- Purchase = No limit Price

- Mortgage = maximal 70% of the purchase or valuation (lesser amount quoted)

- Max Term = 30 years

- Interest presonalized (fix or variable interest)

- Opening commission = from 1%

- Cancelation commission = 0,50% (first 5 years), after 5 years 0,25%

- Minimal official valuations = dependent on purchase price

If you want that I check a mortgage for a *Decision in Principle, VIP Almeria can send you the forms required by the bank:

- Decision in principle form completed and signed

- Form Authorization personal details to use (one per person) completed and signed

- Passport copies

*This documentation is just for a decision IN PRINCIPLE, the documents that I need for a final decision are:

  • Passport
  • NIE
  • Proof of any other source of income (if the client have)
  • Experian Credit report (www.experian.co.uk)
  • Last 6 months Banks Statements where they pay loans and mortgages and where they  cashes the payroll or pensions
  • Last Mortgage Statement
  • Rental contract (if it is rented) or HM Land Registry if they have own house

If employed

  • Last 2 P60 or Tax Returns
  • Letter from employer (where the company say when the clients start to work and the terms of the contract (permanent job, temp / part time work contract …)

Self-employed

  • Last 2 tax returns

The economical approbation will depend of a correct Official Valuation

Under new regulations, Banks can no longer insist on a mortgage loan conditions such as non-requested linked financial services and products (compulsory Life Insurance to cover amount of loan, and House Insurance to cover property basic damages.) 


CURRENT ACCOUNT SERVICES: 

Documents required and services: 

*In general they will only need   *Passports and 
*Activity document (pay slip or pension slip). 

*Clients can open account by email (with scanned documents) in 24 hours.  This will be a dormant account until your NIE is submitted and verified.

Example costs and services for current account & Cards: 

Maintenance commission: For clients receiving salary or pension in the account (min 650 euros/month): NO COMISSION. 
                                 In other cases: 45 euros/year. 

Cost of Debit/Credit Card: For clients with pension or salary: NO COMISSION. 
                                    In other cases: 30 euros/year. 

Services for Current Accounts: 
                                   * Direct Debits 
                                   * English Telephone and Internet Banking Services. 
                                   * Top Up service. 
                                   *Possibility to open different currencies accounts (pounds, dollars..) 

QAm I eligible for a mortgage?

A

The banks in Spain base their decision regarding your ability to repay the mortgage by looking at your net monthly income. Payslips, tax returns and / or bank current accounts are all required as verification of income amounts. They will normally also require the following documentation. This can vary from lender to lender:

All applicants need: Copy of passports, NIE number, bank reference, credit report from home country of residence.

Employed

  • Last P60.

  • Last 3 month’s payslips.

  • Last 6 months Bank statements.

  • Employers reference confirming your role, length of service and current salary or copy of your employment contract.

Self Employed

  • Last Self Assessment Tax Return

  • Accountants Reference confirming gross and net income, plus drawings last year.

  • Bank Statements

Company

  • Incorporation deeds

  • Registration documents for Company (if SL Company)

  • If in Spain, C.I.F.Number

Retired

  • Confirmation letter from pension provider or pension slips.

  • Bank statements for last three months.

  • Last Self Assessment Tax Return/ p60

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QCan I finance 100% of the purchase price?

A

This is no longer an option possible in Spain for general purchases. The lending criteria depends on the valuation of the property. As a guide, you should allow 60 to 70% of the sales price as a mortgageable amount. 

Currently people can borrow 50-60% Loan to Value on a second hand home; However you must allow for your own capital to cover the balance and allow for purchase costs.

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QWhat extra costs are involved in purchasing a property in Spain?

A

To buy a home in Spain with the help of a mortgage, you previously needed to budget about 10-12% of the purchase price as cover for extra costs. Included in these costs are the following:

  • Transfer Tax o­n a resale property OR IVA (Spanish VAT) o­n a new build

  • Stamp Duty on a new build

  • Lawyer fees

  • Bank arrangement fee

  • Fees: notary, gestoria & land registry fees

  • Building insurance

  • Broker fees

However, changes effective as from 17th June 2019

  • You will now pay the fee for obtaining the Bank valuation which is on average approx €600 Euros. 
  • The Banks will now pay the fees associated with the Loan granted which will include: Stamp Duty on the Mortgage Loan, Banks in house gestoria (not your own) fees, Notary and Land Registry fees.
  • Recently introduced too for new Spanish mortgages is a Clause 20 which is complicated and we advise seeking expert legal advice if this is what you would wanted added:

    Clause or Article 20 if inserted to your mortgage will permit borrowers have the right to redenominate their mortgage into their local currency. This is provided for foreign residents who live outside the Eurozone and that includes Spaniards.

  • There is now a "Cooling off Period" where as the Banks must provide the Mortgage contract with all the terms and conditions 14 days prior to the Notary signing. The Notary will then make itself available to give you the opportunity to ask any questions before the signing. Once the Notary is satifised that the Borrower is able to comprehend and understand the mortgage terms, then it will oversee the transfer of the mortgage deed. 

 

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QHow long will it take to obtain a mortgage?

A

Based on our experience of Spanish lenders and the mortgage application process, we can normally give a verbal indication within one week of whether your application is likely to be successful. This is subject to full application, required documentation and a valuation. once all the paperwork is sent to the bank the full process should take approximately four to six weeks.

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QHow do I apply for a mortgage?

A

Please contact V.I.P Almeria office and we will discuss your requirements based on the information you provide to us. We will then be able to make a recommendation based on this information and if acceptable, can then begin the mortgage process. This is a free service to V.I.P Clients.

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QCan I raise funds to build a property?

A

Yes, you can now raise funds for both the build and the land. As long as you have all the relevant building licenses, permissions and architects plans, the lender will advance payment in stages as the building works progress. During this time, you will o­nly pay the interest due on the loan.

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QCan I raise funding on my existing Spanish property if I own it outright?

A

Yes you can, depending on what you will be using the funding for. You can also re-mortgage if you only have a small mortgage outstanding. However, remember that as you will be creating a new mortgage, costs for both cancellation of your existing mortgage and the setting up of the new mortgage will higher than you are accustomed to in your home country. 

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QCan I raise money to finance the deposit for an off-plan property?

A

A mortgage in Spain can only be set up o­nce the property has been completed and registered with the local land registry office. You cannot, therefore, raise the amount for the deposit, at the initial stage, through a loan on that property. Normally, individuals will raise this deposit by either cash they already have or be releasing equity on existing property they own in the UK. However, as the loan o­n completion can be based on the final valuation, some of this cost may be recouped o­n completion.

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QAre mortgages available on properties held in the name of a company?

A

In theory, you can take out a mortgage on a property held by an S.L Spanish Company, an Offshore Company and a UK Company. However, it is a more complicated process than doing it in an individual name.

Your legal adviser would be pleased to go through your individual case.

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QWhat is the provision of funds?

A

This is a detailed list of all the costs involved in your purchase and you should receive a detailed breakdown of all these costs from your legal adviser before you go to the Notary. Your legal adviser can then give you a full explanation of each cost. This includes costs the lender must hold by law and includes the following:

Tax on the mortgage deed

3% of the Capital Gains liability of the vendor (in the case of non-residents)

All fees (notary, registry and gestoria) for both the purchase and mortgage deeds

Stamp duty (for new properties only).

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