Here’s my guide to getting a Gran Canaria mortgage from local banks in 2018 for both resident and non-resident buyers.
Gran Canaria mortgage introduction
As with everything in Spain, getting a local mortgage in Gran Canaria involves plenty of paperwork. However, the system works well and is relatively straightforward if you know what to do.
That said, getting a local mortgage in Gran Canaria can take time so being prepared is key; it can take anything from seven days to four months to go from initial application to approval.
Here are a couple of vital points to bear in mind…
- Bank employees and even managers in Gran Canaria do not take the decision about whether to grant your mortgage application. All they do is collect together the paperwork and send it to the bank’s central mortgage department in Spain.
- Your mortgage isn’t guaranteed even if you are told that you are likely to get it when you apply. Once you sign an ‘oferta vinculante’ document, the bank is committed to giving you the loan.
Every bank has its own conditions and you may well be turned down by one place while others offer you a mortgage. For this reason, it is essential to apply to several local Gran Canaria banks when you want a mortgage.
Gran Canaria resident mortgage
Most banks ask for a minimum 20% deposit when they give you a mortgage. Some, like Santander, will loan you up to 90% (even for a second mortgage). You also need a further 10% of the sale price to cover fees and taxes.
Most Spanish banks also add on things like life insurance and home insurance. You can opt to use other providers for these extras but the banks don’t like it (you can also change providers further down the line). These extras can add up to 100 euros to the total monthly cost of your Gran Canaria mortgage.
New residents in Gran Canaria have to wait for a year before they can get a mortgage with a local bank. This seems to be a universal rule.
Gran Canaria non-resident mortgage
EU citizens and most others can get mortgages from local banks in Gran Canaria although they have to pay a higher deposit of 30%.
Non-residents also have to provide more documentation such as a credit-check from their country of residence and extra proof of income, etc.
Given that the property market in Las Palmas and other desirable areas of Gran Canaria is moving fast, it is worth having all the documents you need (it varies slightly from bank to bank) ready before you apply or make an offer on a Gran Canaria property.
What you need to get a Gran Canaria mortgage
- National photo ID document and copies (passport, identity card)
- Up to six months of bank statements printed out
- A contract of employment and/or other proof of income
- Three years of tax returns from your country of residence
- Documentation showing the repayments of any other mortgages or loans you have
- The equivalent of Spanish quarterly tax declaration for the previous 12-months (if you are self-employed)
- Credit report
How much can you borrow?
The basic formula used by Spanish banks is that your mortgage repayments must not exceed 30% of your monthly disposable income (minus any other loan or mortgage repayments)
If you are planning to purchase a buy-to-let property in Gran Canaria, bear in mind that Spanish banks don’t take the potential rental income into account: Your mortgage is calculated only on your current income.
Fast mortgages in Gran Canaria
If you need a Gran Canaria mortgage fast, talk to your estate agent and/or a good local mortgage broker. Both will know which banks are quick and many estate agents also work with specialist mortgage companies that are far more agile than High Street banks.
They can’t boost your chances of getting a mortgage, but you can get a faster answer.
There are also paid services where you give a company your paperwork and they apply to lots of banks for you. Most of these firms charge you a set fee and earn commission from the banks. There are no specialist Gran Canaria firms of this type and they don’t seem to produce fast results here in the Canary Islands.
If you need a fast mortgage in Gran Canaria, please get in touch as I can often help thanks to my long-term contacts in the most efficient local banks.
Mortgage interest rates in Gran Canaria
All mortgage interest rates in Spain and Gran Canaria are calculated using the Euribor (Euro Interbank Offered Rate used by banks when they lend each other money) It is the European equivalent of the LIBOR rate used in the UK and USA.
Variable mortgage interest rates in Spain are calculated as Euribor plus a percentage that is set by the bank and expressed as ‘Euribor más X%’.
The Euribor base rate varies regularly but is currently at close to historical lows. For this reason, it is worth considering a fixed-rate mortgage if you are buying a Gran Canaria property in 2018. Initial repayments may be higher than with a variable rate mortgage, but you are protected against future rises in the Euribor rate (most experts believe that rates will rise during the coming years).
Gran Canaria mortgage strategy for buyers
Having helped dozens of buyers to get a Gran Canaria mortgage, this is what I recommend that you do to make the process as straightforward as possible.
- Apply at least three banks; a national Spanish bank such as Santander or La Caixa, an online bank such as ING Direct, and a smaller Spanish bank such as Sabadell or Bankia. You can also try alternative online banks, but please have a backup plan.
- Get an estimate of how much the banks are likely to give you so that you aren’t disappointed later on.
- Get all your paperwork together and have it all printed out and stored online.
- Provide any extra paperwork you are asked for as quickly as possible to avoid a chain of delays.
- If your Spanish isn’t excellent, use a specialist broker or trusted estate agent to advise you.
- Pay for a valuation (tasación) if you are in a hurry as banks often have a queue. Use one of the big Spanish companies such as TINSA as their reports are accepted by almost all of the main mortgage banks (check with the banks).
- Transfer your deposit and the 10% needed for fees into a Spanish bank account in advance.This prevents delays when you need the money fast.
Don’t hesitate to email or phone me if you have any questions about Gran Canaria mortgages. Or, just ask a question using this form and I’ll reply ASAP (almost always within 24-hours).