I need to apply for a mortgage to buy a property in Lanzarote – How difficult is the process?

Everything you need to know about financing the purchase of a property in Lanzarote

In case you are looking for a property to buy in Lanzarote but do not dispose of the full amount of the apartment or villa you are intending to purchase, our team can help you to apply for a mortgage in Spain.

Can I obtain a mortgage in the UK, Germany, France, etc. to purchase a property in Lanzarote?

If you have assets in your country which you can remortgage in order to liberate the funds, we recommend you speak to your local bank and consult with them. You can only finance a property purchase in Lanzarote through your local bank by increasing or mortgaging your home or other properties you might have. Usually banks in the UK, Germany, France or other European countries do not grant any mortgage in other countries.

Can I obtain a mortgage in Spain? If so, what is the mortgage application process?

If you wish to apply for a mortgage in Spain, take in account the for EU members Spanish banks will lend you up to 70% of the property price and that you will need to have available the other 30% plus the cost of purchase with mortgage which is another 10%. If you are a Non EU member, I.e, British or Swiss then you will have 60% of the value of the property and there for you will need to have the other 50% available funds in order to achieve a mortgage in Spain.

The process of the mortgage application will be the following:

First Step – Get in touch with your mortgage advisor or bank manager for an initial meeting in which all the most important points are explained to you, such as the current conditions, interest rates, etc. If you are taking the services of a general mortgage broker such as Habeno, the first step would be to visit their website and kick off the approval process by visiting their simulation site: Lanzarote Agent mortgage pre-approval

Second step – As soon as you have chosen a bank and have agreed on the terms and conditions, the bank manager or mortgage broker will require several documents they need in order to assess your solvency, credit rating, etc. Below we are showing you a list of documents they will potentially require from you.

The bank will study your personal financial situation which includes an analysis of your monthly income, other investments and monthly expenses, current savings, etc. This can take time depending on the bank between 5 between 14 days. It is recommendable, that this step has been already completed prior to your house hunt, since it gives you clarity about your maximum budget and will put you in a favourable position in a dynamic real estate market, in which properties get sold quickly.

After having received your pre-approval, the bank will look into the documents of the property and will ask you for the “nota simple” of the villa or apartment you would like to purchase. Your estate agent or lawyer will organise this document for you. They will deduct a valuation of the property and will let you finally know, which percentage they can lend you. Usually the valuation has a cost of 500€. The whole process from the first contact with the bank to the final approval usually takes between 5 – 8 weeks.
After the evaluation of the bank, the bank will finalise the proposal and will do all the arrangements necessary to prepare the signing in the notary, where a consultant from the bank will help you with all the official paperwork such as the signing of the “escritura de préstamo hipotecario” which is a deed in which the terms and conditions of the mortgage will be signing and then registered in the land registry together with the deed of your property.

It is convenient if you do not live in Lanzarote to leave a POA with your solicitor as there are 2 meetings at the notary that need to be done 15 days before completing the process and if you do not have the flexibility to travel to Lanzarote before the purchase you will not be able to meet the deadline with the bank.

What is the minimum deposit I need?

If you are applying for a Spanish mortgage as a non-resident, you will need to have at least a 30% deposit nonetheless this amount could be higher, depending on the results of the pre-study the bank has to deduct in order to assess if you are “mortgageable”. In most cases, you will need another 10% which needs to be added to the required deposit, covering the costs of the mortgage over the years.

Spanish banks lend between 50 – 70% to non-residents, which means that you need to have at least 40% of the value of the property (30% deposit + 10%) in case they approve a mortgage of 70%. If the bank decides to lend you 50%, you would need 60% (50% deposit + 10%). These figures are very important to take into consideration and to sort out with the bank before you look into viewing properties.

Another important point is the valuation deducted by the bank. The figures states above apply to market value of the property or to the valuation deducted by the bank (tasación), which in some cases is lower than the market value of the house.

The maximum debt to income (DTI) ratio that mortgage lenders will accept is usually around 35-40%, including the mortgage payment.

Which documents do I need for the mortgage application process?

Copies of your Passport / NIE (for all parties that will be on the mortgage)
Your most recent tax declaration or P60 (2 years)
Your last three payslips
Details of other properties you own including any potential rental income
Bank statements for the last 6 month
A credit report (if available in your country)

What is the maximum age to qualify for a Spanish mortgage?

Spanish banks will require you to amortize your mortgage by the end of 70, which in most cases means that they will not accept you if you are older than 64. Also, you need to consider that the older you are and the less time you have to pay-off the mortgage and the higher the monthly fee.

How likely will a Spanish bank accept my mortgage application?

As estate agents, we get a lot of questions regarding the monthly fees, interest rates, down payment as well as the likeliness the bank will approve their mortgage application.

Since we are real estate experts, we can give you a rough guidance on how banks operate nonetheless we always recommend that you speak to an expert nearer the time you are intending to purchase a property. Please be aware of the fact that the evaluation of the bank can differ and change within weeks or months and depends on the general economy, political situations and events as well as new regulations.

Our collaborator Habeno has created a description of the perfect candidate applying for a Spanish mortgage, an average buyer persona so to say, which has the following characteristics:

The perfect profile to fast approval

The perfect profile to fast approval
Couples up to 55 years old
Both employees
Stable tax declaration for the last 3 years
Debt to Income ratio (DTI) within 35%, including the new mortgage to be contracted

Example:
– Salary 5.000€ net/month
– Existing loans: 800€/month
– New mortgage in Spain: 950€/month

Earnings and tax declaration in currencies here listed:

Euros
UK Pounds
US Dollar
Swedish Crown
Norwegian Crown
Danish Crown
Island Crown
Australian Dollar
Canadian Dollar
Japanese Yen
Mexican Peso
Polish Zloty
Singapore Dollar
Swiss Francs

* Other currencies: some can be accepted with a purchase through a Spanish company. Please consult us

*Other profiles are of course feasible but can take longer to approve depending on the documentation to be supplied

Please follow this link below if you like to apply for a mortgage with Habeno:

https://habeno.com/form?partnerId=a3bf51b0-6be7-46b9-89be-08db09af225f

FAQs

How can I apply for a mortgage in Lanzarote if I am a foreigner?

As a foreigner, you can apply for a mortgage in Lanzarote. First, you will need to obtain a Foreigner Identification Number (NIE), which is essential for any financial transaction in Spain. Next, you will need to submit the necessary documentation that demonstrates your financial capacity, such as bank statements, tax returns, and proof of income. It is advisable to have a financial advisor or lawyer guide you through the process.

What are the requirements to apply for a mortgage in Lanzarote?

The requirements to apply for a mortgage in Lanzarote include having an NIE, presenting documents that prove your financial solvency, such as tax returns, bank statements and proof of income. You will also need an appraisal of the property you want to buy and, in some cases, a guarantee. Financial institutions will also review your credit history to determine your ability to pay.

How long does the process of applying for a mortgage in Lanzarote take?

The process to apply for a mortgage in Lanzarote can vary, but generally takes between 4 to 8 weeks from application submission to final approval. This time may be affected by how quickly you submit all required documentation and how efficient the bank is in evaluating your application.

Can I apply for a mortgage in Lanzarote with a credit history abroad?

Yes, you can apply for a mortgage in Lanzarote with a credit history abroad. However, the bank will evaluate your financial solvency comprehensively, which may include reviewing your credit history in your home country. You may need to provide additional documentation and certified translations of your financial records to facilitate the process.

Do you see yourself reflected in this profile and wonder if you would be able to qualify for a Spanish mortgage? You can contact Habeno directly or in case you prefer to speak to a local bank manager in Lanzarote.