If you wish to purchase a property in Tenerife with a Spanish mortgage, here are the basics of what can be achieved and what you should expect:
Fiscal residents of Tenerife:
Up to 80% of the purchase price or valuation, whichever is the lower.
Non Residents:
Up to 70% of the purchase price or valuation, whichever is the lower.
Some very common misinformation in Tenerife about mortgages is that you can borrow up to 100% of the purchase price if the valuation of the property is much higher than the purchase price. This is simply not true and has not been possible for a long, long time!
Calculating affordability
If you are a non-resident and you qualify for a 70% mortgage then you need to have a deposit of 30% available. In addition you will need approximately 11% to cover all of the associated purchase costs. So, you need about 41% of your planned purchase price.
On a 100,000€ purchase cash required is 41,000€. On a 200,000€ purchase, cash required is 82,000€ and so on. It is important to understand this if you require a mortgage and that you are realistic about what you can afford. If you need any help whatsoever, simply ask – that´s what we are here for.
Don´t lose your deposit!
One of the dangers of purchasing with a mortgage in Tenerife is that the bank you work with can cancel your mortgage agreement at any time. They are at no point legally bound to give you a mortgage. They may change their product line, decide to withdraw from the market or increase all of their interest rates at anytime. Because of this you must have a mortgage clause in place in any purchase agreement you sign. If you pay across a 10% deposit then that money IS at risk if you have not got a mortgage clause. Any decent agent in Tenerife will point this out and ensure you are protected. We will not work with any agent who refuses to do this and we strongly suggest you follow our lead on this. There is absolutely no reason why you should have to take any risk with your money when buying with a mortgage but people can and do lose their deposits on a regular basis.
The driver behind unscrupulous agents not wanting to protect you with a mortgage clause is that they have already arranged that they will get half of your deposit and the property owner will get half of your deposit should you not proceed with the sale for any reason (including not being able to obtain the mortgage you require.) What this means is that once you have paid a deposit, the agent knows he is going to make his money (if you have paid a 10,000€ deposit then he stands to make 5,000€ even if you do not go ahead!!) This is not something we support, the problem is, this practice is widespread and is as common as it is unethical.
Mortgage pre-qualification
Most people when asked, believe that they are a good mortgage client for any bank and that mortgage lenders in Tenerife should be falling over themselves to lend them money, unfortunately nothing could be further from the truth and whilst most banks will still give mortgages, they are now extremely careful when screening clients and their accompanying documentation. To avoid wasting weeks and sometimes even months with a futile mortgage application we suggest you “Pre-qualify” before you begin viewing property. We can carry out a full assessment and give you a straight answer as to what you will be able to borrow and how much it will cost. This save you time, gives you the numbers you need to start searching for a property and also means that you aren´t viewing properties that are outside of your budget. Pre-qualification is a free service we provide to all clients.
Simply contact us at info@HomeFinderTenerife.com and find out exactly what you can borrow in today’s mortgage market.
For more information about Tenerife mortgages visit http://TenerifeMortgageBroker.com