Here’s pretty much everything you need to know about getting a Gran Canaria mortgage in 2017…
Getting a Gran Canaria mortgage
Getting a mortgage in Gran Canaria involves lots of paperwork but isn’t a particularly complex procedure.
However, depending on the bank and on your circumstances, it can take anything between seven days and four months to go from application to approval.
Here are a couple of vital points to bear in mind…
- The final decision about your mortgage application is taken by bank headquarters and not the people you meet in the bank in Gran Canaria. They process your application and can give their opinion about your chances, but have zero influence on the decision.
- Your mortgage isn’t guaranteed until you have signed the ‘oferta vinculante’ document. This commits the bank to honoring the terms it has offered you.
Spanish banks all have different mortgage criteria and one bank may turn you down for the smallest of reasons while others approve you. This is why it is vital to apply to several banks for a Gran Canaria mortgage.
Getting a Gran Canaria mortgage as a resident
The banks in Gran Canaria currently ask you for a 20-30% deposit when they offer you a mortgage. However, they are relaxing their requirements and 90% mortgages do exist.
Online bank ING Direct offers 80% of the official valuation of the property (but it’s application process is laborious and its conditions strict).
Santander offers up to 90% of the purchase price for first and second mortgages.
You have to add 10% of the purchase price to your deposit for taxes and fees. And you also have to factor in the extras that Spanish banks add to their mortgages; things like life insurance and home insurance. These can add over 100 euros per month to the cost of your mortgage.
Note that if you have just arrived in Gran Canaria and got your residencia you may not be able to get a mortgage for the first year even if you have a work contract. Or you may be asked for a larger deposit.
Getting a Gran Canaria mortgage as a non-resident
Most non-residents have to pay an extra 10% deposit when they buy a Gran Canaria property with a mortgage.
EU citizens and people from most countries with modern banking systems have no problem getting a mortgage in Gran Canaria.
You may need to have certain documents officially verified for them to be accepted.
To get a mortgage as a non-resident, you will need a Spanish bank account but it doesn’t need to be with the bank you apply to.
The documents you need to get a Gran Canaria mortgage
All banks have slightly different requirements so this is only a guide. I recommend having all your documentation stored on Google Drive or at least in your email so that you can forward them on to the banks. You should also bring all original paperwork with you just in case it is required.
- Your national photo ID document (passport, identity card; provide both)
- At least three months of payslips (best to have six month’s worth)
- Your work contract
- Last year’s annual tax return (have at least 3 years available)
- Bank statements for the previous six months
- Documentation for any outstanding loans that includes the amount outstanding
- If you are self-employed, you need to provide the equivalent of the Spanish quarterly tax declaration for the previous 12-months.
Non-residents and new residents will also need an official credit report from their home country.
How much can I borrow in Gran Canaria
Most Spanish banks base their calculation on the amount you can comfortably repay. The formula they use is to keep loans down to a level where the monthly repayment doesn’t exceed 30% of your income (after deducting any other loan repayments).
Spanish banks will not take future rental income into account when they calculate how much they will lend you.
Getting a Gran Canaria mortgage fast!
There is a way to get a fast mortgage in Gran Canaria for both residents and non-residents: Use a decent mortgage broker.
A good mortgage broker gets your paperwork in fast and can get a mortgage approved within a few days. This won’t increase your chances of getting a mortgage, but does speed up the process.
You need a broker that that is independent and can approach all banks rather than working with one particular company. Most are free (please contact me before you sign up to a paid service) as they get their commission from the bank.
Where do you find a good independent mortgage broker in Gran Canaria?
I know an excellent one so just get in touch.
Gran Canaria mortgage interest rates
Variable mortgage rates in Spain are expressed as Euribor plus a percentage. For example, ‘Euribor más 0.75%’; your mortgage interest rate would be the current Euribor rate plus 0.75%.
The Euribor is the daily reference rate, published by the European Money Markets Institute, based on the averaged interest rates at which Eurozone banks offer to lend unsecured funds to other banks in the euro wholesale money market.
It is currently around zero or even negative so interest rates on mortgages are low. Each buyer must make up their own mind about whether to choose a fixed-rate or variable rate mortgage in Spain.
The optimum Gran Canaria mortgage strategy
Here’s the strategy I advise all my clients to follow when they apply for a mortgage in Gran Canaria…
- I advise all my clients to apply at least three banks; a big Spanish bank such as Santander (currently offerring the best terms for residents), an online bank such as ING Direct, and a smaller Spanish bank such as Sabadell, Bankia, a Caja (Spanish building society), etc.
- Ask the banks how much they are prepared to lend and ask for pre-approval (dependent on property valuation, etc).
- Have all the paperwork stored digitally and on paper with all correct stamps, etc.
- Be ready to provide additional documents as quickly as possible.
- If you are in a hurry or don’t have the time or language skills to apply yourself, use a good mortgage broker to increase the number of banks that you apply to.
- If you are in a hurry, consider paying for a valuation (tasación) as this often takes the banks a few days to arrange. A property valuation done by one of the big Spanish companies is accepted by almost all of the main mortgage banks.
- Have your deposit and the 10% needed for fees in Spain when you start your application process. There’s no point getting the mortgage approved and then having to wait for money to arrive from home.
If you have any further questions about mortgages in Gran Canaria, please don’t hesitate to email or phone me. Or, just ask a question using this form and I’ll reply ASAP (almost always within 24-hours).