In recent years Spain has become the most popular location for UK residents to buy their second home or to move abroad. Before you buy your dream home, it is wise enough to ask yourself a simple question, ‘How much house can I afford‘. Determining your mortgage affordability is very important while taking out a home loan for your house. Buying a house beyond your affordability can lead you to the danger of losing your home to foreclosure. Therefore all prospective homeowners must have some knowledge on their mortgage affordability in Spain before taking out such a loan for your house.
How much can you borrow in Spain?
There is no non-status or self certification mortgage facilities available in Spain but renting out your property is allowed. In Spain, any mortgage application needs to be supported by a proof of income where you have to show whether or not you’re employed. If you’re employed, you need to provide them with last three month’s pay slips and the employer’s reference together with copies of your personal bank statements. Unfortunately in Spain, the proposed lenders will not consider any income that the property could make in the way of rent. Your mortgage loan amount will be totally based on the joint net “take home” pay and this will be calculated on your affordability basis.
However, all your existing liabilities that include mortgage payments, personal loan payments, credit card payments, child’s education costs together with your proposed Spanish mortgage payments must not exceed 35% of your gross monthly income. The size of mortgage loans available in Spain is constantly changing. Today, the maximum that you can borrow for your mortgage in Spain is 80% of the purchase price. However this is also limited to 70% of the valuation of the property. This means that in order to take out a mortgage of 80%, the respective property must be valued at a price that is higher than what you bought it for. Since nobody can predict what your property is going to value at, thus nobody can guarantee you an 80% mortgage.
Thus, if you are a prospective homebuyer in Spain, consider calculating your affordability. If “How much house can I afford” is the question that is haunting you, consider the way a mortgage loan is taken out in Spain. There are more than 100 banks that offer mortgages in Spain. You just have to take into account all the steps and end up taking out a mortgage at the best affordable price.
