In order to get a mortgage in Spain, the banks now demand more guarantees and the client has to be able to demonstrate solvency and a good financial track record amongst other things.
Unlike before the economic crisis, in order to get a mortgage in Spain, the banks demand more guarantees and the client has to be able to demonstrate solvency and a good financial track record amongst other things.
The graphic below shows the massive decrease in the total value of mortgages conceded in Spain well before the start of the crisis in 2003, through the peak of the financial bubble in 2007 and then through the financial crisis of 2008 to 2012 until the situation began to improve a few years ago.
Obviously, as the crisis bottoms out banks are becoming a little more relaxed but the 5 requirements for getting a mortgage in Spain outlined in this article still serve as a good rule of thumb and even foreign buyers and investors should bear them in mind if they decide to look for financing here.
You currently cannot obtain a mortgage in Spain unless you bring some of your own savings to the deal. A few years ago, banks were prepared to finance over 100% of a property purchase. However, these days the situation has changed and banks want to see guarantees and are only prepared to finance 80%.
This means that you really need to have 35% of the value of the mortgage already saved. For example, if the property costs €100,000 (much too cheap for property in Barcelona, by the way), you will need to ha €35,000 saved (€15,000 for costs associating with taking on the mortgage and €20,000 corresponding to the 20% of the value of the property that the bank will not finance).
When asking for a mortgage in Spain, you have to able to show that you have a stable income that is high enough to cover the repayments. The majority of banks currently require that the contractees have a combined income of at least €2,000 per month. Both for the bank and the buyers, it is obviously a better guarantee that there is more than one signatory to the mortgage contract because if one of them has financial difficulties for whatever reason, they'll have the support of the other.
Similarly, the monthly repayment of the mortgage can never be
more than 35% of the income of the contractees. So if you have an
income of €2,000 a month, the maximum repayment will be €700 a month. A
higher income is a better guarantee both for the bank and the
signatories because it reduces the risk of non-payment.
A requirement for getting a mortgage is having a stable job,
with a track record and a high salary in a sector which is expected to
grow in the future. For example, being a civil servant would be a point
in favour when seeking a mortgage because job security is guaranteed.
If you don't have sufficient, it is possible that the bank
will ask you to provide the of a guarantor, who will guarantee to pay
the mortgage repayment in the case that you could not. Offering such a
guarantee is very risk because it doesn't offer any benefits to the
guarantor but does put their income and assets at risk in both the
present and the future.
If you already have loans from the same bank and have failed to keep up with the payments at any point, it is unlikely that the bank will be prepared to give you a mortgage. Your profile will be considered unreliable, particularly given that the risks involved in a mortgage are typically much higher than those involved in a personal loan.
It is also not to be
on any of the increasingly common debtors lists here in Spain, such as ASNEF
(Asociación Nacional de Establecimientos Financieros de Crédito) or RAI
(Registro de Aceptaciones Impagadas). Similarly, as banks become more internationally-linked, they will also check on the bad credit indexes in your country of origin.
As I stated above, these considerations are just as true for foreign residents in Spain as they are for Catalan and Spanish locals. The situation is a little different if your common place of residence is another country and you're thinking of obtaining a Spanish mortgage in order to invest in property here.