If you need a mortgage in Spain you will want to get the ‘best’ mortgage for you; the mortgage that best suits your requirements, with the most flexibility, and at the lowest possible total cost over the lifetime of the mortgage (not just the upfront cost). In other words, the cheapest and most flexible Spanish mortgage that you can get, taking into account your financial circumstances.
There is a bewildering selection of mortgages available in Spain, all with their own costs and benefits, so you have to invest a lot of time and effort into finding a mortgage if you want to get the best one for you. Not being in Spain, and the language barrier, can make it even more difficult for many English-speakers to get a good mortgage in Spain.
For many English-speakers the best solution is to use a good mortgage broker specialising in Spanish mortgages.
A good broker starts by helping you to define your mortgage needs – something that many banks fail to do. It is impossible to get you the mortgage that best suits you needs at the lowest cost without helping you to define and understand exactly what your mortgage needs are.
In the process of helping you define your needs, a Spanish mortgage broker should also evaluate your creditworthiness. An accurate idea of how much debt you can cope with will help a mortgage broker select the right mortgage product for you, and negotiate the best terms with the lender on your behalf. It is important that you do not take on a mortgage that is bigger than you can manage, and a good Spanish mortgage broker can help you avoid this.
In this consultation period a Spanish mortgage broker can also give you valuable mortgage advice. Experienced Spanish mortgage brokers have helped many other foreigners to get a Spanish mortgage, which gives them valuable experience that you can benefit from.
Advantages of using a mortgage broker
Spanish mortgage brokers work with many or all of the mortgage lenders in Spain, and should know all about the products on offer. Good brokers know how to interpret the small print, and identify the hidden costs that you might not be wise to. They know which banks are offering promotions and special deals in order to meet monthly targets or gain market share. And they know when and where pressure can be applied to negotiate the best terms for you (people are often surprised to discover that even branch managers of large banks are willing and able to ‘cut a deal’ if the negotiations are correctly managed).
Mortgage brokers also use their reputations with lenders to leverage the best deal for their clients. Spanish mortgage lenders appreciate the work mortgage brokers do in bringing them overseas clients – clients that those lenders would have difficulty in assessing on their own. Mortgage lenders appreciate the fact that mortgage brokers break down the language barrier between client and lender, and in some cases they also appreciate the volume of business that these brokers bring them. All of these things: business volume, convenience for lenders, reduced risk for lenders, and the market insight of knowing where the best deals are at any particular moment, mean that clients can benefit from using a good, professional, experienced Spanish mortgage broker.
Foreign buyers of Spanish property who take out a mortgage in Spain to finance their purchase should never forget that even small differences in mortgage terms could have a big impact on costs over the lifetime of the Spanish mortgage. Half a percentage point may not seem that important on paper in the exciting process of buying a Spanish property, but over the years the excitement will wear off, but the costs will not. Keep this in mind during the process of selecting a Spanish mortgage. This is the kind of small detail that makes a big difference that a good Spanish mortgage broker should ensure is taken into account.
Spanish mortgage broker services
A good Spanish mortgage broker should offer the following services:
- Helping you with each and every aspect of arranging a mortgage in Spain. They explain the documentation required, what is going on at every stage of the process, and provide you with the information you require in a language that you understand. They also give you forewarning well in advance of key deadlines.
- They give you insight into the ‘total’ cost of the mortgage. This means explaining to you all the costs you will face over the lifetime of the mortgage, and how these costs might change with the overall economic environment (for example changes in inflation and interest rates).
- Advice on the best mortgage for you given your requirements today and in the future.
- Advice on remortgaging your Spanish property or equity drawdowns.
But a Spanish mortgage broker isn’t for everyone
For most expats in need of a mortgage in Spain, using a specialist broker is the most sensible option. But using a Spanish mortgage broker has a cost, and is not the only option.
A good broker should make your life much easier, save you bundles of time, and get you the best deal, saving you stress in the short run and money in the long run. But you do have to pay the broker’s fees, and not all brokers are worth their fees.
Many people have now set up as mortgage brokers in Spain, and many of them do not have the knowledge or experience to justify their fees. They do little beyond introduce you to a local bank, and push mortgages that pay the highest commissions, not the best mortgage for you.
Some of the British and Irish people claiming to be specialist mortgage brokers in Spain are in fact just fraudsters taking advantage of expat buyers. Be particularly wary of people offering 100% (or more) mortgages, and demanding up front broker fees.
A good Spanish mortgage broker can provide a great service, but if you have a good credit profile, and you can afford to spend some time researching Spanish mortgages, then you may not need to use a mortgage broker. You can save yourself the broker’s fee of between 0.5% and 1% or more of the value of the mortgage by going direct to lenders. In which case be sure to get quotes from a selection of lenders.