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Getting A Mortgage in Spain

Mar 6, 2008
For all of its structural weaknesses Spain is considered one of Europes leading economies. Located on and north of the Gibraltar Straight, Spain is constituted through a center right government and runs a mixed economy. In fact, Spain is one of the only countries within the European Union that was able to avoid zero percent growth in recent years. Although there is a variety of industry within Spain it is its tourism industry that is most impressive. Over the last 40 years the country has grown tourism into the second largest in the world while generating almost 40,000 million Euros in the process.

Unfortunately, the successes found within tourism cannot be translated into the mortgage market where pricing pressures have left younger buyers scraping by to meet payments or rents. Current loans that are available include:

For purchase (including land)

Re-mortgage

Interest only

Self build

Variable

Fixed

Non-status loans are available

Up to 30 year interest only available

Commercial loans

Even with a low interest rate of 3.5 percent as an introductory offer and then 4.25 percent there after it is the loan to value conditions that help to make decisions. Although vary strictly monitored and designed to keep people in Spain ,or move there, loan to value conditions include:

Based on land valuation

E180,000 loan to value based on 95 percent loan to value and the intent to become a Spanish citizen.

No maximum loan amount for up to 70-80 percent of loan to value amount

Equity release of up to 60 percent of loan to value

Self certification of up to 60 percent of loan to value

In most respects even the term of the mortgage is generous at 40 years. The age limit is fair as well at 75 years old. There also is no limit on the 30 year interest only product if higher interest rates are in place. Documentation is fairly straight forward and includes, at the minimum:

Six months of bank statements

P60 or equivalent

Letter from accountant indicating taxes paid

Three years of audited accounts if self employed

Certified true copies of passports

Two forms of address identification

Completed application form

Despite Spains remarkably strong economy, which is thought to be able to overtake Germanys per capita income levels in the very near future, its debt level within the younger and poorer populations may derail mortgages, growth and investment. Recently Spain has been partaking in the global housing boom with 16 percent of GDP being comprised of construction. Unfortunately, investment in education, research and development have been underperformers in recent years causing a loss of manufacturing jobs to lower cost countries. But if this were not enough, Spain has been ranked the worst educational system in the European Union. Perhaps the bubble is about to burst and it will fall to tourism to save the day but, at the moment, Spain is on the move and awaiting anybody that would like a mortgage.
About the Author
Leo Fogarty is Marketing Director of the mortgage specialists Euromortgage. He is also a regular author for financial magazines, most notably Property Gallery Magazine in Ireland and is an expert on mortgages , remortgages , equity releases and overseas mortgages .
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