Spanish Mortgage Lending to Non-Nationals Easing

After a difficult couple of years Spanish banks are easing their restrictions on mortgage lending to non-Spanish nationals. Whilst the banks are more selective about the lending criteria, generally EU citizens are finding that they are being offered 70% of the property purchase price if they can demonstrate a good level of income and satisfactory credit history.

According to Chris Mercer, Director of Mercers, “Spanish banks are lending to non-nationals. What percentage and on what terms, does depend on the borrower. Spanish banks are also starting to use similar tactics to US banks in that they are using a basic sort of credit check – the results then have an impact on the terms offered. If an applicant has a good income, good credit history and assets, then the terms offered are likely to be better than someone who is not in such a fortunate position. As a rough guide, non-nationals can expect to get between 60% - 80% of the official valuation. The rates on offer tend to be approximately 1.5% - 2% above the Euribor rate. Many banks will also offer the initial first two years as interest only, which might be of interest to investors.”

An alternative proposition for investors may be to look at new developments where the developer has struck a deal with the bank to allow new purchasers to subrogate the existing mortgage which, (due to falling prices) can be as much as 100% of the current purchase price. The lending criteria are still rigorous because banks are taking care to avoid the reckless lending that led to the current situation. However, for clients with a healthy credit record the combination of heavily discounted property prices and low interest rates makes Spain an attractive place to invest.

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