Mortgage valuations

You will need to get an official property valuation to get a mortgage in Spain

Property valuations, or ‘tasaciones’ in Spanish, play an important role in the Spanish property market as they determine how much banks are prepared to lend to house buyers.

The loan-to-value (LTV) ratio that mortgage lenders in Spain use is based on a mortgage valuation carried out by one of Spain’s accredited valuation companies, and not on the agreed sale price. These days post-crisis, valuations tend to be conservative and often below the sale price, which buyers who need a mortgage should bear in mind.

For example, if you have agreed to pay €100,000 for a property (not including taxes and other transaction costs which often add up to 12% of the price), and have €50,000 in own funds, then you will need a mortgage of €62,000 (€50,000 + 12% transactions costs of €12,000), which would be a LTV of 62% of the market price. Banks will often accept LTVs of 70% so this shouldn’t be a problem. However, if the mortgage valuation carried out by a professional valuer on behalf of the bank gives a value of €85,000, then a LTV of 70% works out at €59,500, which would leave you short of funds to complete the purchase.

The point is that your mortgage loan will be based on the mortgage appraisal value given by an accredited valuation company (tasador) working on behalf of the bank, and not based on the agreed sale price. This is an important variable to bear in mind when doing your numbers

You will also have to pay for the mortgage appraisal, which will cost a few hundred euro. The lender appoints the appraisal company, not you. They randomly select the company from a list of approved valuers that they work with, to avoid influencing the valuation in any way. So if you apply for a mortgage in Spain, the lender will arrange the valuation, but you will have to pay for it.