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The main differences between a Spanish and UK Mortgage

- Updated: 03/06/2011
The main differences between a Spanish and UK Mortgage

Although the overall principal of successfully applying for a mortgage is the same in Spain as it is in the UK, there are a few differences between the 2 products that it pays to be aware of. Any mortgage that will be offered to you is likely to vary considerably from bank to bank and often a Professional Mortgage Broker can be the best person to help you cut through the bureaucracy and industry jargon and to help you to find you some good offers to compare and consider before submitting the application on your behalf.

Just a few of the differences that you will need to take on board when you are considering submitting a mortgage application are listed below :

• Mortgages issued by Spanish lenders are usually done so on a repayment basis. In other words the loan and the interest applied to it are simultaneously repaid by equal installments over the term of the loan. Other loans such as Endowment. Pension, Interest only and PEP Mortgages are largely unheard of.

• Early repayment of any mortgages are often restricted and in many cases even penalised.

• The whole application process from initial application through to completion of the purchase is a far more time consuming, complicated and stricter process than in the UK.

• Usually Spanish mortgages are offered on a 15 year term, as opposed the standard 25 year term in the UK, however some lenders offer terms between 5 and 25 years, but these are few and far between. These loans generally have to be repaid in full by your 70th Birthday – in some cases the 65th.

• Fixed rate loans, where the interest rate remains constant throughout the term of the loan, are more popular and more widely offered in Spain than in the UK.

• The loan amount permitted is calculated differently than it is in the UK, and whilst it can vary from lender to lender, it is usually calculate so that the mortgage repayment will be no more than 30 - 35% of your monthly nett disposable income.

• Some Lenders will not issue mortgages on rural properties, some will not lend on properties that are value under a certain amount and some will have a minimum loan value of around 20’000.

• Staged repayments on New Build Properties and Restored Properties is calculate completely differently than it is in the UK.

• There is no mortgage deed as there is in the UK – Instead any such mortgage will be mentioned on the Escritura for the property and signed in front of the Notary.

- Everybody’s circumstances are different and recommends that professional advise is sought as soon as you decide to purchase a property in Spain – it can often be a good idea to do this before you have even found a property that you like so that you can be sure of the amount that you can comfortably borrow.

Comment on this Article

Information on best way to finance a mortgage in Spain We have offer accepted but still unsure of best way to finance. Regards, S Quigley
Stephen Quigley - Mon 20th May 2013
Helpful information but the last point on this page 'There is no mortgage deed' isn't correct. I can assure you, I've had three and they go into ridiculous detail too, as typically the notary charges per word or page for mortgage deeds.
Henry - Sat 20th Apr 2013