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If you’re one of the people who reckon this is a fantastic time to invest in property, we can’t help thinking you’re absolutely right.

You might have some money saved up, but if you want to buy the property you really want, you’ll probably need to take out a mortgage. Buying a home is one of the biggest and most important investments people tend to make in their lives.

Bear in mind that there are various different types of financing. You can mortgage the property you’re going to buy in Spain, generally with a Spanish bank, or you can re-mortgage a property you own in your home country to obtain the funds to allow you to purchase your new property in Spain.

If you go for the second option, one of the main benefits is that your bank already knows you well. Moreover, there are some countries with lower interest rates than Spain.

You can choose between a fixed or variable rate mortgage. Most banks use the Euribor as the reference value for variable interest loans. However, as interest rates are currently still very low, it’s advisable to go for fixed-rate for long-term financing.

If a buyer needs a shorter-term loan because, for example, they’ve found their dream home and want to buy it now but have another property which they have yet to sell, they can apply for a bridge loan. This will provide them with the financing they need to buy the new house without waiting to sell the old one first, with the subsequent risk of losing it.

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You probably have a few concerns: that the banks might trick you, that you might not pick the best option, that you’re denied the loan, that you miss something important…

Don’t worry, it’s perfectly normal to feel this way and the vast majority of people who embark on a mortgage application are in the same boat.

The most important thing is to be sure of the main concepts and to spend some time studying all the available options.

Relax and pay attention to these mortgage application tips we’ve prepared for you:

6 fool-proof tips

  • Pay attention to all the details of the contract:Mortgages are usually for considerable amounts of money and for a long time, so it’s very important to pay attention to all the little nitty-gritty details of the contract before you sign it. Otherwise, you could spend many years regretting it.
  • A correct valuation of your property is fundamental: The huge importance of obtaining a correct valuation of your property by a professional who provides it in accordance with market reality is unarguable when it comes to applying for a mortgage.

    The property valuation is required to use the property as the guarantee for the loan and correctly assess the risk of the operation. Remember too that the bank will only give you a mortgage for a percentage of the valuation value, not the entire amount.

  • Apply for a mortgage you can afford: Try not to fool yourself. If you don’t have a permanent job or other sources of income, savings or other assets or people who can underwrite the loan for you, your chances of obtaining a mortgage shrink considerably.

    Your personal situation will directly influence the conditions of the mortgage the bank is going to offer you. Bear that in mind when you apply for a mortgage and don’t aspire to something you can’t afford. Request a mortgage in keeping with your personal and financial situation.

    You should also remember that a mortgage that suits your needs and your financial capacities will be less likely to cause problems in the future. As a rule of thumb, it’s unadvisable to apply for a mortgage for more than 80% of the price of the property.

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  • Try and find a property that’s attractive for the bank, too: We’re not saying you should choose a home to suit the bank’s tastes, but they are also interested in the property you’re going to buy.

    If it’s a second or holiday home, the mortgage conditions will be much tougher than if it’s a main residence. The bank is taking a much greater risk by lending you money for a second or holiday home.

    The property type and location are also things to consider. The valuation depends on the characteristics of the property and on where it is. If the home is attractive for future buyers, it will pose less of a risk for the bank.

    Don’t forget that banks have their own selection of available properties. If one of them coincides with what you’re looking for, you’ll probably be able to obtain better mortgage conditions.

  • It’s useless to compare mortgages without considering all the factors: People tend to compare mortgages without taking their own situation into account. While it’s a good idea to explore all the options, it’s no good finding out which is the best mortgage on the market if the bank in question will refuse to finance you due to your personal circumstances.

    It’s important to make an initial list of mortgage options and, once you’re sure which ones suit you best, check all the details and go for the one that best suits your requirements and, more importantly, your possibilities.

  • Plan your long-term finances:It’s important to spend some time planning your domestic finances for the next few years. Ideally, the amount you will need for your monthly mortgage repayments should not be more than 35% of your income. This means you can be sure you’re not biting off more than you can chew and you won’t end up in debt.
Buyers

Keep all these tips in mind when the time comes to apply for a mortgage. Don’t forget any of them!

The goal is to find a mortgage that the bank can give you and that you can repay with peace of mind and long-term quality of life. You must be well prepared and always keep your best interests in mind.

If you need more information, please feel free to contact us, we’ll be delighted to help!

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