Mortgage in Spain: January 2020 Update

Mortgage in Spain

Are you buying property and thinking about applying for a mortgage in Spain? There are obviously pros and cons for cash purchasers and mortgages. However, applying for a mortgage in Spain, even if it is for a small amount can have its benefits.

Our selected mortgage partner will explain more in their January 2020 update …


Mortgage in Spain: January 2020 Update

At Mortgage Direct, the first few weeks of 2020 have been very busy in respect of new clients signing up for our service and also interest from potential new clients. We believe that 2020 will be a strong year for us, as familiarity with the new regulations takes hold and there is less uncertainty over Brexit.

In the last few weeks, we have seen a significant increase in the number of buyers who are buying properties as their main residence. They range from those who are moving to Spain to take on new roles with their existing or new employers, to those who can work from anywhere, to those who are retired or retiring and don’t have to work at all. Of all our clients starting the formal mortgage process this month, more than 50% are buying the property as their main residence, whereas for the same period last year the majority of clients were buying homes exclusively for holiday use. It will be interesting to see if this develops into a trend in the coming months.

This may sound a ridiculous question, but we still come across properties that our clients wish to purchase, where the seller failed to register their ownership after buying it. After signing the deeds, paying the taxes and receiving the keys, it should be common sense to register oneself as the new owner, but we are still coming across situations where this has never been done.  Sellers must always be registered as owners at the registro – the Spanish land register.

It’s vitally important to check that the property you wish to purchase was correctly registered in the current owner’s name. If this isn’t the case, your purchase could be significantly delayed. 

Mark Stucklin of Spanish Property Insight explains further:

“The law does not oblige you to inscribe your title but there are significant advantages in doing so such as:

  •   Being considered the only true owner of the property.
  •   Protection from the vendor’s creditors.
  •   No one else can register a claim on the property without your consent.
  •   Being able to secure loans against your property.”

How does a mortgage help? 

The good news is that if you are taking out a mortgage in Spain to assist the purchase, the Registro will be checked as part of the legal process. The bank won’t lend the finance unless the property is correctly registered. 

Another advantage of taking out a mortgage is that a suitable valuation must be carried out by a company approved by the Bank of Spain. Sometimes cash buyers don’t get their properties valued and although the accuracy of the valuation reports is sometimes questionable (in terms of the values given to the properties) the legal checks carried out as part of the valuation will highlight any problems with a property’s registration.

If you sell your property in the future, you also have the peace of mind that if that buyer needs a mortgage, a correctly registered property will help prevent delays in the buying process. This is the case for urban land properties, as well as properties on rustic land.

It’s advisable to speak with your lawyer, especially if you do not speak Spanish, to ensure all the necessary steps are taken before and after completion.

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