Acceptance criteria for a mortgage in Spain
The eligibility requirements for a Spanish mortgage differ considerably between Dutch and Spanish banks. Firstly, in Spain there should always be a demonstrable fixed monthly income (preferably from employment). The bank should be able to see that you receive a fixed monthly salary for a longer period. This provides security for the Spanish bank. They look at the current situation and the average of last two years.
In addition, Spanish banks do not include future income in their mortgage offers. So the expected proceeds of e.g. a B&B never affect the amount or price of your mortgage!
There are also a number of other requirements from Spanish banks that you will have to meet:
Age & duration
A mortgage in Spain has a maximum term of 25 years for non-residents. Unlike in the Netherlands, the mortgage must be fully annuitised before the 75th year. As a result, a customer aged 55 can only get a mortgage with a maximum term of 20 years. The Spanish bank regularly bases the maturity on the oldest person in the couple. Banks are therefore very reluctant to give a mortgage in Spain if you are over 65 (maximum term is then 10 years).
Income threshold (DTI)
A maximum of 35% of joint net income may go towards gross housing costs. This means the gross living costs in the Netherlands as well as the living costs of any financing abroad. Also included here are monthly other credit and/or partner maintenance obligations. If this percentage is exceeded, a mortgage application in Spain will be rejected.
Income from renting out second homes is assessed as secondary income. This looks at the rental income, as well as the mortgage charges on the rental properties, and the debt-to-value ratio.
Want to know if your income (vs expenses) is right?
See if your Debt-to-income ratio is below 35%! Use our handy online calculator. This will help you calculate whether you have enough room to qualify for a mortgage.