Obtaining a mortgage in Spain

Do you need personalised financing for the purchase of your holiday home in Spain? At Inmo Investments, we help you obtain a mortgage that suits your financial circumstances for the purchase of your home on the Costa Blanca, thanks to our collaboration with different banking institutions.

Let's take a look at some of the basic concepts and requirements for financing a home in Spain.

The real estate mortgage itself is the guarantee that the debtor (or someone else on his or her behalf) provides to the bank or institution lending the money, for the purchase of a property.

It consists of a piece of real estate (or several) being offered and secured as a guarantee that the money lent will be returned, so that if the mortgage is not paid according to the agreed terms, the creditor can request the sale of the property at auction to collect the outstanding debt, leaving a surplus for any other creditors or the property owner.

Since the creditor has the guarantee of the property, low-interest and long-term mortgage loans can be granted.

Legally, the mortgaged home is never considered to be the property of the bank because the lender has granted the mortgage. At all times, the home remains the property of the person who bought it, and the property owner can sell the home, rent it, or even remortgage it, within legal limits.

Banks frequently ask for someone to guarantee the granting of a mortgage, especially if the person requesting the loan has relatively little income compared with the size of the mortgage loan.

Expenses before the loan is granted

As part of the mortgage application process, the bank or financial institution will carry out an appraisal of the property to be mortgaged and will request a report from the Property Registry to verify that there are no charges or liens against the property to be mortgaged.

These processes have a cost, and the cost must be paid by the mortgage applicant even if the loan is not finally granted. Mortgage application expenses will be detailed in the bank's information brochure. These expenses are usually around 200 € and might vary depending on the value of the property.

Expenses when issuing a mortgage

Opening commission
Around 1% of the borrowed capital (as approved). The mortgage provider deducts the commission directly from the money it gives to the borrower.

AJD Tax
AJD is calculated as 0,5% of the total guaranteed loan amount (not just the principal loan, but everything including the original mortgage loan, interest and costs). It's usually around 1% of the total capital.

Notary and Registry
These are the official fees that these professionals will charge. The amount charged depends directly on the value of the capital of the mortgage, and it can be approximately 1.000& € for a property in Spain.

Management expenses
The deed, once signed, is presented at the Treasury offices to settle the tax liabilities mentioned above, and then presented to the corresponding Property Registry for registration.

The processing will normally be carried out by a Bank agent since otherwise the money will not be delivered until it is registered.

Prices vary depending on location and the policy of the lending agent, but budget for about 150 € for the costs of management expenses.