In order for the bank to approve you for a mortgage, they primarily look at two factors to consider your affordability for a mortgage in Spain:
The loan to value and your debt to income ratio
Loan To Value
Banks usually offer to lend 80% of the purchase price (excluding fees). It is possible to achieve slightly more than 80%, but the client’s circumstances have to be optimal for the bank to consider this. If you are interested in a mortgage of more than 80%, please contact us to discuss whether this will be possible for your situation.
The maximum loan to value banks offer at the moment is 70% of the purchase price. That being said, it is common that they only give 60%. The percentage can vary depending on the country in which you reside/declare your taxes and your mortgage preferences.
Debt to Income
One of the most important elements when applying for a mortgage in Spain is INCOME and DEBT. The relation between these two is important, as it gives the bank information on how much you are able to pay per month towards a mortgage. The bank will only allow your total debt to represent a certain percentage of your income (normally they will base their calculation on your net income). The percentage will vary on a case by case basis, but for residents the banks will usually accept a DTI of 30-35% (up to 40% in special cases). For non-residents, the accepted DTI is set to 25-35%, depending on the LTV.
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