The first question that usually comes to mind when we consider applying for a mortgage loan in Spain in 2020 is whether they will grant it to us. The answer to this question depends on multiple factors that we will try to analyse in detail. It influences both the value of the house and its price, as the financial entity that offers the mortgage, our economic situation and the possibility of providing additional guarantees.
If you are looking for a 100% mortgage in Mallorca, Barcelona or Madrid, some of you looking for a mortgage have a temporary contract, you do not provide guarantors and other circumstances that make it difficult to get a mortgage, you undoubtedly need the services of the mortgage brokers selected by our mortgage portal:
Some ingredients that you have to know how to mix in just the right amount in order to obtain the best possible combination: the best mortgage within our reach. The mortgage experts who collaborate with Futur Finances will analyse your case, so you know if you can get your loan with guarantees of success.
RESOLVE YOUR QUESTIONS ABOUT MORTGAGES
The free Futur Finances forum offers you the possibility of solving your doubts with some of the best mortgage professionals in Spain, economists like Alberto Ferreiras, Antonio Gallardo or Pau A. Monserrat, mortgage experts like Ricardo Gulias, Santiago Cruz o Antonio Beltrán, lawyers like Cristina Borrallo or insurance brokers like Carlos Lluch, among others.
PURCHASE VALUE AND APPRAISAL
It is very important to be clear about these two values before anything else. Purchase-sale value, market value and appraised value are terms that refer to the same home but do not have to coincide.
The purchase-sale value is what we pay for the house. It is reflected in the deed of sale and purchase and based on it certain taxes are paid (VAT or ITP, capital gain when sold and there is no reinvestment of the habitual residence, among others).
The market value and the appraisal value should coincide, but in times of a sharp drop in prices such as the current one (or of increases such as in the housing boom), the appraisal often does not exactly reflect the market value of the home, since it incorporates the expectation of descent (or rise) in its valuation. In any case, we are interested in knowing the appraised value.
If for example we have saved for expenses (between 10 and 13% of the purchase value, more or less), we will need the mortgage to grant us 100% of the purchase value, at least. A mortgage loan whose limit is 80% of the lower value between sale and appraisal, for example, would be useless.
If we do not have savings expenses and we want a 100% mortgage plus expenses, the only option will be that at 80% of appraisal we reach this amount (the mortgage does not have a purchase value limit) or a mortgage loan that reaches 100% of the appraised value. Currently, only with highly solvent guarantors or double guarantees, there are clear options for mortgages at 100% plus expenses.
The bank, in order to analyse if we can pay the monthly mortgage payment, calculates our net income and applies a ratio of between 30 and 40%. The resulting figure is called borrowing capacity, and is the maximum monthly amount that the financial institution estimates that we can pay.
If two holders who earn a total of 2,000 euros want to know the maximum amount they will be able to pay, they must apply the previous percentages, resulting in a debt capacity of between 600 and 800 euros per month. If the mortgage financing we need exceeds this fee, better look for a cheaper home or wait until you have more money saved.
To calculate the borrowing capacity of the holders who request financing, financial institutions take the net monthly income, which is subtracted from other loan or card installments that are paid and are not refinanced in the new mortgage, as well as fixed monthly expenses not usual (for example subtract what is paid for child support in case of divorce). In any case, the risk analysis of each entity is different, based on its computer development and real knowledge of the market.
Applying for a mortgage while unemployed or with a temporary contract is, today, an impossible task. Banks want holders with permanent contracts or officials, if possible. If we are self-employed or have a contract for work or service, it will complicate things for us if we do not provide documentation that proves the stability of our income.
The more stability we have in employment, the fewer interruptions due to unemployment we present and the better the company and the sector in which we work, the more possibilities of obtaining the mortgage.
Many times with our contract and that of the other owners, it is not enough to obtain a mortgage. With such a high unemployment rate in Spain, banks are trying to make sure that they will collect the money they are going to leave in every way possible.
If we have money saved, investment funds or another type of financial product that can be pledged, the possibilities of obtaining the mortgage increase. The same happens if they sign creditworthy and solvent guarantors or we can provide a double real estate guarantee (which will be partially mortgaged). If we have debt or crowdfunding investments, they will help or harm us depending on whether they are loans (they do not help) or investments (they can help).
We have to be aware that it is a matter of convincing the bank that we will be able to pay the mortgage without problems for a period.