Why is MBF good for property buyers?

Buyers are usually unsure if and how they can finance a property through Spanish banks – we help them navigate that maze and find the perfect fit – and we do it really fast. Even if you have a connection with a bank we can most likely get a better deal than you can from your own bank – from our network we pick what we know is the best potential solutions and make them compete for the deal. Services, interest and various fees might differ several percentage points between opportunities. Just speaking with a single potential lender is wrong. MBF makes life easier for buyers.

Why is MBF good for real estate agents?

Real estate agents like to know, preferably even before the buyer arrives in Spain, that the buyer has a realistic budget enabling the agent to better advise the buyer on what properties might be of interest to him/her. Having a pre-approved mortgage in place is

also a massive advantage when negotiating the purchase price with the seller. MBF makes life easier for agents.

Why is MBF good for banks?

Banks are used to working with us and we, effectively, do a portion of their work so that they don’t have to do it all from scratch. The banks also know that we have no emotional attachment to the property or potential deal and are fully objective and also that each potential deal is submitted to a number of other banks in competition. MBF makes life easier for banks.

What’s so complicated with Spanish mortgages?

Every country and every market is different. We know Spain and Spanish mortgages so for us it is not complicated but, literally, business as usual. For those that do not work with this every day it might be complicated, even overwhelming – since you are reading this you probably have some trepidation about the process – please relax, this is what we do, every day, again and again and again.
Spain, as opposed to many other countries, is a country that runs on networks, connections and negotiation. Most banks, institutions and professionals have publicly displayed terms and conditions, documentation requirements, etc. but, even though these are often very good guidelines, it frequently still comes down to who you know and your ability to negotiate a beneficial deal.
A bank might have very clear and transparent demands for who can get what type of financing on what terms. The reality however, is that the negotiable terms and conditions can vary not only between banks, but also between branches and, in some cases, between managers at the same bransch.

Who CAN get a Spanish mortgage?

If your income and asset/debt ratio is within the acceptable range (in Spain a good rule of thumb is that a mortgage payment should not be over approximately 35% of your disposable income) you should normally be approved for a mortgage. If you are not a resident, the maximum mortgage is 70% of the purchase price. If you are a resident with declared income in Spain, the maximum mortgage is, usually, 80%. A mortgage should, in general, be paid back by the time you reach 70-75 years of age. A mortgage is usually no longer than 25 years. You will also need a NIE number, passport and other documentation.

Who SHOULD get a Spanish mortgage?

This is a complicated question and not easy to answer. Depending on your unique situation and intended property purchase the answer will be different for different people. But in general a person who wants to own a property in Spain would be well advised to explore the option. There are many things to consider and unpack here. For instance a mortgage in a Spanish bank will lower your Spanish wealth with the same amount but if the mortgage is with your bank in your home country it will not; are you allowed to deduct Spanish interest payments in your home country and is the reverse true; what if I live in Spain but my spouse do not; etc. There are any number of good and relevant questions to answer but they are individual and no general answers will be true for all. When we work with a buyer we raise all questions and identify the best solutions for that particular case. Usually the higher the purchase price of the property the more potential complexities there are, but with more complexity also comes more opportunities.

I can pay cash, why should I get a mortgage?

Again, not an easy question with no straight answer but in general if you are looking to buy something above €500k, or already own other properties in Spain, you would be well advised to get a mortgage. Spanish wealth tax startsat around €700k and an unfinanced property couts for its full value whereas a mortgage will lower that wealth. We work with a number of private banking partners that, depending on your situation, might optimize your investment and exposure in a way that can only be done at the time of purchase. We have many international property buyers who start out intending to pay several million cash for a property but end up financing their property through our network of private banking partners – severely cutting, or completely eliminating, costs and exposure with a bespoke financial solution.

What kind of banks does MBF work with?

We work only with banks certified to operate under the Spanish Central Bank, following the EU banking legislation.

What happens if I can’t pay my mortgage installments?

This is, of course, not good – as it would be in any country. In Spain a mortgage is a personal debt so if seizing/selling the house does not satisfy the debt and legal costs, then the bank can, and often, will go after you, in Spain and in your country of residence.

However, the bank does not really want to own properties and will, in most cases, want to negotiate a new solution that fits both parties – they will likely not forgive any portion of the debt but if there’s a solution that is more likely to give them their money back it’s often possible to negotiate a period of interest only payments etc.

For this question as well there exists no single answer that will be right for all situations.

Our suggestion should this situation occur is to immediately contact your lawyer and let the lawyer initiate re-negotiations before the situation snowballs. Once the bank foreclosed costs and a higher interest rate as well as administrative costs will quickly add up. Refraining from taking any action will always be worse than doing nothing and incur more costs, administration and angst making things worse – quite likely worse than they have to be.

If you are currently in this situation and don’t have a lawyer – just send us a message and we’ll be happy to recommend someone from our network.

The cost of a mortgage in Spain

There are certain costs associated with obtaining a mortgage in Spain: As a general rule of thumb you can say that closing costs for a new build is around 12% of the purchase price and for a “second hand” property it’s around 10%. Below is a detailed breakdown of the general costs involved in buying a property with a mortgage.

Mortgage associated costs
The bank will arrange for a professional appraiser to prepare a report on the value of the property. The cost of this will be passed on to the buyer and usually costs anywhere from €100 to €500 depending on the property.

Opening fee
The bank will charge a percentage (usually around 1% of the purchase price) to set everything up. It’s a one time payment that is charged up front when the mortgage is signed.