Spanish Mortgage News
By Chris Burke
This article is published on: 17th May 2014
In the last two months, we have seen some incredibly positive things happening in respect of mortgage lending for non-residents. This affects not only product conditions (see below), but also service standards.
In March, two of the main lenders contacted one of our mortgage brokers us to ask us if they could meet decision makers in their banks to understand how they can compete for and win more non-resident mortgage business. They met with two members of the Board of Directors of one of the largest banks in Spain and last week we met two senior officials from another of the largest banks.
At these meetings we advised that to compete effectively banks need to offer at least 70% of purchase price, with no compulsory life assurance, without a minimum rate (“suelo”), for all nationalities, and to improve the efficiency and turnaround times for approvals.
We have also advised that debt-to-income ratios could be increased to gain more business from rivals, but this seems to be something that is harder to get banks to change. Many banks are currently using a 30% debt-to-income ratio, so monthly debts (including the new Spanish mortgage) must not exceed 30% of overall net monthly income. Some banks are using 40%, but these banks are not offering the best conditions. It is worth noting that the 30% rule is often relaxed slightly for high-earners.
We anticipate that changes will be made one step at a time, but have been very encouraged by the results of these meetings. Here are some new conditions we have been involved in negotiating:
- 70% now available for most other nationalities (case-by-case basis for non-Europeans)
- Low interest rates from annual Euribor + 2%
- Products without compulsory life assurance
- 30-year terms available
- Fast-track approval with decisions in 1-2 weeks from submitting all requested documents
For Scandinavian clients, as most agents are already aware, Nykredit has often been the preferred bank to use because they offer attractive conditions and 70% for Scandinavian nationals (up until recently they offered up to 80%, but this is now very difficult to achieve with them). We are getting more and more Scandinavian clients coming to us telling us that Nykredit has declined their mortgage, is taking an eternity to approve it or requires them to invest large sums to get approval for 80%. What is clear is that Nykredit is purposefully slowing down its lending for Spanish property purchases. This now appears to be in contrast to the leading Spanish banks. Nykredit has also made clear that it is not keen on self-employed applicants, cheaper properties, non-touristic areas and even some very popular holiday destinations such as Ibiza.
| MAXIMUM LTV |
Fiscal Residents – 80% Non-residents – 70% |
| EURIBOR* | 12 month (annual) – 0.549% |
| EXCHANGE RATES |
1 GBP = 1,1952 EUR 1 EURO = 0.8367 GBP |
Data correct at the time of writing
* Based on purchase price or bank valuation (lowest of the two)
** All non-resident mortgages are now based on the annual Euribor with a loading of 2 – 4%. The margins now vary considerably depending on the bank in question and the customer profile and some banks have minimum rates