If you are considering buying a property in Andalucia because you live and work here, want somewhere to spend your holidays in Marbella or because you want to invest in real estate, you may need to consider taking out a mortgage with a Spanish bank.

Interest rates in Spain vary but are generally much lower than the UK. The costs of arranging a mortgage are high and competition between the banks here is fierce. If you are interested in buying a property off plan you may find that the developers already have an agreement with a Spanish bank for all the mortgages and you are left with little choice. If you are buying a new build then a firm mortgage offer will only be given once the property is completed and a property valuation been carried out. The best option by far to shop around for the best deal.
Do not accept the first offer you receive but ask for a copy of it and then take it to a different bank to ask if they can offer a better deal – which they often do.

You will be asked to prove your ability to meet the mortgage repayments by providing documents like wage slips from the last three months, a reference from your employer confirming your role, length of service and current salary (or a copy of your employment contract and bank statements for the last six months. If you are self-employed they will require copies of your last three year’s accounts (with an auditor’s stamp) and copies of you last 12 months business bank statements and last 6 months personal bank statements. Proof of payment based on your ability to pay with income received from renting the property will not be accepted by Spanish banks.

If you are applying as a company you will be asked for Incorporation Deeds, registration documents for the Company (if SL Company) and a CIF Number if it is based in Spain.
Retired applicants need a confirmation letter from their pension provider or pension slips, bank statements for the last three months and their last Self Assessment Tax Return/P60

If you are not a legal resident in this country, then you may be asked to provide an aval which is someone (usually based in Spain) who agrees to pay in the event of you being unable to. You will also be required to have an NIE (Numero de Identificación para Extranjeros) which everyone needs (residents and non-residents) to buy or sell property in Spain.

Most Spanish banks currently offer mortgages of 60-80% property price over 5, 10, 15 or 20 years depending on whether you are a resident here. Some banks offer 100%. It is also possible to have a combination of 70% European mortgage and 30% re-mortgage. The current variable rate is about 4.7% and there is usually an early write-off fee of around 1%.

Your liabilities should not exceed 35% of your net monthly income, and banks use the following variables to determine your ability to pay the mortgage:
- Existing liabilities (loans or mortgages, maintenance agreements)
- Future liabilities (including the proposed loan)
- Current income and investments.

The different types of mortgages available in Spain include:
Low Repayment - Interest Only:
- Up to 15 years (interest only)
- Up to 70% final valuation
- No redemption fees
- Interest charged on daily basis
- Up to age 80
Low Deposit - 80% Valuation:
- Up to 80% of final valuation
-Low initial interest rate
- Term up to 35 years
Bridging Loan (New Property):
- Up to 100% value of new property plus costs
- Payment break for first three months
- Interest only to the end of the third year if unable to sell old property
- Before tend of the third year pay off debt on old property with no redemption fees
Low Repayment - Self-Certification:
-Up to 50% of final valuation
-Up to 5 years interest only
-Minimum proof of ability to pay
Self-Certification - Self-Declaration:
-Up to 40% of final valuation
-For individuals who are unable to prove their earnings - self declaration
-Up to age 75 / 80.
-Term up to 35 years
-Self-signed letter and copy of passport
Low Repayment - Equity Release - Remortgaging:
-Up to 60% valuation
-Interest only up to 15 years
- Term up to 40 years
- Up to age 80
- No redemption fees
- Equity Release
- Up to 70% valuation
- Interest only for up to 2 years
- Term up to 30 years
- Up to age 75
Above are just the basic facts, and the best course of action is to contact an established mortgage broker.