1: MORTGAGES IN SPAIN OR RAISING FINANCE IN SPAIN

Loan to Values: Standard loan to values are up to 80% for non-resident mortgages in Spain and are always linked to the valuation of the property, not the purchase price, and cannot exceed the price declared on the Escritura (title deeds).

Product Ranges: Finance is predominately linked to a variable rate and on a repayment basis and variable rate products are generally linked to the yearly euribor (European inter bank offered rate) and your interest rate will be reviewed yearly. Your interest rate for the first 12 months is determined by the euribor at the month of completion plus the fixed margin above that which your selected Spanish bank is charging. There is growing access through banks in Spain to interest-only terms and fixed rates.

Equity Release and Re-mortgaging in Spain: Releasing equity and re-mortgaging is available through select lenders in Spain. The legal process of securing a loan in Spain makes it more difficult and costly to make any changes to your Spanish mortgage post completion. Raising funds against an unencumbered Spanish property, releasing further funds or changing the terms is controlled by the Bank of Spain and further tax, bank and notary costs will apply. In Spain, under the current legislation, it is advisable to raise the maximum funding you require for your current and future needs. Lender, product and rates need to be carefully selected to ensure they are the most suitable for your needs. Lender and product hopping, which is now standard practice in the UK, is not advisable in Spain without careful planning and advice.

Term: Spanish mortgage terms range from 5 to 40 years, dependent on age and Spanish finance provider selected. Most Spanish banks expect the mortgage to be repaid by age 70 but it is possible to obtain a mortgage up to age 80.

Costs: All Spanish banks charge an arrangement fee for dealing with your mortgage and fees are payable at completion. All other costs in relation to the Spanish mortgage deed including mortgage tax, registry costs and some of the purchase deed costs are deducted from your gross mortgage advance. It is not possible to add your costs to the Spanish mortgage unless your valuation level allows you to.

Currency: If you take a Spanish mortgage with a mainland Spanish bank, the capital provided and repayments will be in Euros. Offshore lenders can also take security over your Spanish property and many will provide the funds and take repayments in any major currency of your choice. Your interest rate will be linked to the base rate of the currency you select. For most Euro mortgages this will be the yearly euribor.

Underwriting Criteria: Most mortgages in Spain are only granted on a full status basis. You can obtain a legitimate self-certified mortgage up to 65% of the valuation of the property. Most Spanish banks will assess your income net of tax and will want to see that the combined existing UK and new Spanish monthly liabilities do not exceed 1/3rd of your proven monthly net income. It is possible with some banks to extend this ratio to 45% of net income and each bank in Spain will underwrite in a slightly different manner. In general, Spanish banks will not take into account any projected rental income from your Spanish property when assessing your application. There are no specific "buy to let" products currently available.

Benefits of Raising Finance in Spain: Low interest rates and protection of your UK assets can be some of the key benefits of borrowing in Spain. All alternatives should, however, be understood and considered before making a final decision.

Employed Applicants: need to provide, 3 month's pay-slips, P60, 3 month's bank statements, Employer's reference, Copy of Passport

Self Employed Applicants: need to provide, Self Assessment tax return, Accountant’s reference, 3 months bank statements, copy of passport.

Resident Document Requirements for Employed: Contract of employment stamped by social security, Vida Laboral, La Renta, 3 months’ nominas, Bank reference.

Resident Document Requirements for Self Employed: Certificate of Autonomo or Escritura for SL, Gestor reference, 1 to 2 years Profit and Loss accounts, La Renta, last 3 quarterly IVA returns, 3 months’ bank statements.

Some banks in Spain may require you to supply your credit file from the UK or may check your credit file direct. Any loans subsequently granted will not be registered on your credit file in the UK.

Hot Property will be happy to recommend Mortgage Brokers/Advisers, on request.

2: LANGUAGE

Spanish is a collection of regional languages, the most common being Castilian, which is spoken by 75% of the population & is the third most common in the world after Mandarin & English. It is spoken by over 300 million, more than 3 times the number that speak French. Other languages spoken in Spain are Basque, Catalan & Galician. The Spanish alphabet does not use the letter w & the symbols ch & ll have recently been removed. They used to be placed after c & l respectively. If you have to spell out words, here is the Spanish System.

A: Antonio. B: Barcelona. C: Carmen. D: Dolores E: Enrique.

F: Francia. G: Gerona. H: Historia. I: Inés. J: José.

K: Kilo. L: Lorenzo. M: Madrid. N: Navarra. O: Oviedo.

P: Paris. Q: Querido. R: Ramón. S: Sábado. T: Tarragona.

U: Ulises. V: Valencia. W: Washington. X: Xiquina.

Y: Yegua. Z: Zaragoza.

Once in Spain, even the most tentative attempts to speak Spanish are greatly appreciated. Spain has the highest number of language schools in the whole of Europe & many local authorities run courses. One tip is to speak clearly, particularly in a noisy bar. You may be correct in your pronunciation, but if you are too quiet the waiter may not understand and you will then try to correct something that was correct the first time.

3: THE SPANISH HEALTH SERVICE

Spain has a national health service, which can be used by all European Pensioners and those employed & self-employed persons paying social security taxes. Reciprocal European holiday agreements can not be used for those living full time in Spain. It should also be born in mind that, although some clinics provide free translation services and some doctors and nurses speak English, it may be necessary to pay for a translator. Because of this many ex-pats purchase medical insurance. Policy costs are a lot cheaper than in the UK and it is therefore possible to ensure that only English speaking Doctors and specialists are used. On oddity of this is that, when using medical insurance, any scans, tests, etc are returned, after consultation, to the patient and these should be kept for future reference. All prescriptions, for pensioners, through the National Health Service are free. For this reason many ex-pats have private insurance for future use and for visits to a GP, but still use the National Health for long term repeat prescription drugs. In any event, once living in Spain, it is sensible to register with a G.P. either private or National health.

Farmacia: The chemists in Spain are able to sell many drugs without aprescription, that in the UK would require a visit to the doctor. There are exceptions to this rule, i.e. tranquilisers. This is very useful as an appointment is not necessary, most chemists speak some English and there is at least always one open – 24/7. (Details are shown in the window of any chemist and published in the local press). If you have the need for the same drug that has been prescribed by a private doctor, then keep the prescription as, in most cases, you can use it again. This saves paying the doctor’s consultation fees twice. It is sensible to write on the back of the prescription what it is for, as over time, a family could build quite a collection. But, if in doubt, always consult your GP. (National Health prescriptions are not returned).

4. FOCUS ON JAVEA

Javea lies between the capes of San Antonio & La Nao and is flanked by the impressive Montgo Mountain, which resembles the head of an Elephant with the trunk stretching in to the sea. It is the most easterly point of the Valencian coastline. Javea has a varied landscape, ranging from large sandy beaches or small coves, to rugged mountains. Beautiful, modern facilities make Javea an appealing town & it has a large ex-pat community & many English speaking businesses. Javea has three distinctive areas. 1) The historic old town is centred round the church of San Bartolomé – a fine example of late Gothic defensive architecture - surrounded by whitewashed houses with iron grilles and golden Tosca stone porticos. Within easy walking distance through the narrow streets is the indoor market selling household goods, fruit, vegetables, meat & fresh fish delivered daily from 2) The fishing Port & marina, with superb fish restaurants and a lovely promenade and beach, with pavement cafes & bars overlooking the sea. The attractive marina & modern yacht club has 300 berths & facilities for all types of water sports including sailing, fishing, scuba diving, water skiing & windsurfing. The Port area is bordered by streets with numerous shops, cafés, restaurants & businesses, all with apartments over. This gives a vibrant feel and there is a Spanish pavement culture well into the evenings. A short drive takes you to 3) The popular Arenal beach is the commercial & tourist centre of the town and is fringed by a pretty promenade with its fascinating shops and boutiques and a superb selection of bars & restaurants, offering national & international cuisine. The beautiful sandy beach has palm trees & play areas for children.

Javea has a 20 km coastline, washed by the clean, warm, blue Mediterranean Sea & stretching from the Cova Tallá to the Cala de la Granadella. It has an interesting mix of beaches, some soft and sandy, others small and shingled, bordered by pine trees and favoured by divers and yet others for naturists. There are also small coves at Portichol & La Sardinera.

This newsletter is intended as a guide and to be informative and helpful in the process of searching for and purchasing a property in Spain. Total accuracy cannot be guaranteed and in all legal, fiscal and other matters a fully qualified professional should be consulted. Reproduction of any part of this newsletter is not permitted without written permission.