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We have 232 properties for sale in Tenerife This month 32 properties were added
October 08, 2014

Taking Out A Mortgage

If you are planning on taking out a mortgage to buy your property in Tenerife then you need to start the process even before you have found your dream home. This will then put you in a good position when you eventually decide which property in Tenerife to buy and you can make an offer straight away, which may give you an advantage over any other would-be buyers.

Mortgages aren’t granted overnight and the process can take a while as you may have to try several banks until you find one which can offer you the conditions that you are looking for. We can introduce you to some of the accredited Spanish banks and we will be on hand to help you throughout the qualification process.
It has to be said that over the last couple of years, the banks have given out less mortgages and on the mortgages that they do give out, the conditions are more restrictive than before.

If you have purchased your property in Tenerife as a non-resident and it is your first property in Spain, then the maximum amount that you can expect to get from a Spanish bank is 60% of the official value of the property (after a bank valuation has been carried out and which you as the applicant must pay for) or 60% of the purchase price, whichever is the lowest.

The interest rates are calculated by using the European base rate, called the “euribor” and then to this, each bank applies their own interest rate, known as the “diferencial”. This bank rate is monitored directly by each individual banking body and they can increase or decrease their rate depending on the current economic climate. There will also be initial banking commissions for setting up the mortgage account.

However, if you want to reduce the costs of setting up a mortgage, you as the new buyer have the option of taking over the existing mortgage on the property and thereby avoid costs such as the mortgage set up commissions and also the bank valuation costs. This is called a “subrogación de hipoteca” and you then have the choice, if you wish further down the line, of moving your mortgage to another bank if they can offer you more favorable conditions.

The mortgage application process for any property in Tenerife will be very similar from bank to bank. Initially you will have to complete the corresponding application form and provide detailed information about yourself, your source of income, details of outgoings and information on any other loans or credits you may have. You will have to provide proof of any income or earnings and the bank will usually run a credit check on any mortgage applicant.

Once the mortgage has been approved, the Bank Manager will accompany you to the Notary office on the day of the signing, to hand over the cheque. You then get the keys to your new home in Tenerife!