Quarter after quarter, almost one in ten acquisition operations is carried out by citizens from outside Spain. And the numbers keep going up!
The first of the requirements to apply for a mortgage in Spain and get approval in 2021 is to have sufficient savings. And that’s because, at the moment, banks do not finance the full price of the house (there are few exceptions), but usually they cover up to 60% of the value of sale or valuation. Consequently, you will need to have the remaining 40% to pay for the rest of the new property.
The total of the costs of sale and deeds of mortgage must be added.
Of course, they will also require us to earn a good monthly salary. If your income is not enough to cover this amount, the mortgage can be requested together with another owner so that together we can equal or exceed that minimum amount required by the bank.
In addition, it should be remembered that the Bank of Spain recommends not dedicating more than 35% of your income to paying financial debts, including the mortgage payment, to avoid putting your economy at risk. Therefore, you must calculate the monthly payments of the mortgages that interest you to ensure that you will not exceed that limit.
Another requirement that the bank will demand from you is to have a permanent job, in which you have a certain amount of seniority which would make us less likely to be unemployed, so that you will have a high enough salary to meet the mortgage payments without risk to our economy.
Another aspect that any bank will review before granting a mortgage loan, is your credit history. Thus, if we are on a list of defaulters, especially due to financial debts, or if our history shows a past default, it will be practically impossible to get the bank to give us what we need.
Also, if you have many outstanding loans, although you have not had defaults, your options will also be reduced, since we will need higher income so that the sum of all our debts does not exceed the debt recommendation of the Bank of Spain.
If the bank considers that your financial profile is not good enough to give you the money, providing other assets or a guarantee can be of great help.
However, the guarantor is jointly and severally liable for the debt incurred when signing the contract, for which they assume certain risks by accepting the following obligations:
- Be responsible for the debt that they contract with all your assets, both present and future, which may be executed in the event of non-payment.
- In the event that the mortgage holder dies, the heirs will assume the mortgage loan and the guarantor will continue to be a guarantee of payment.
- If it is the guarantor who dies, their heirs will also keep the responsibility that the guarantor accepted.