Steps to apply for a mortgage

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Steps to apply for a mortgage

Mortgages are an important resource when you want to buy a home or invest in a property. Despite the economic and banking context being disrupted, this process remains the same. We shall explain what you need to comply for access to a mortgage loan.

What are the steps to apply for a mortgage?

Although each financial institution has its own requirements and policies, in Spain this process is made up of:

1. Stable employment

For this application, it is essential to demonstrate that you have an indefinite employment contract and that with some antiquity. This is synonymous with security and demonstrates that you have liquidity to assume the monthly payments and other loan expenses.

2. Sufficient income

Related to the above, you must have an income that adjusts to the instalments assigned to the mortgage loan. If your salary is not enough, you can utilize a joint owner to meet the bank's requirements. Ideally, you should only commit between 35-40% of what you earn for debt.

3. 30% of capital for the property

At this time, financial institutions are covering 80% of the total value of a home. This means that you must have enough savings to cover the remaining 20% ​​and 10-12% related to purchase and deed registration expenses.

4. Good credit history

If you are on a list of defaulters, you will not have the credibility to get what you are asking for. In these conditions of health and economic crisis, banks must attract solvent customers. If you have accumulated a lot of debt, you have several loans to pay, and your debt percentage exceeds 40%, it is unlikely that you will receive a loan.

5. Guarantees and additional guarantors

Just because your financial profile is lower than expected does not mean that you are doomed to seek other options. You have the opportunity to seek a guarantor or put any asset you own as collateral.

In the case of having a guarantor, keep in mind that they will be the person(s) responsible for the debt and will contract several obligations:

  • If non-payment occurs, they must respond with their present and future earnings and assets.
  • If the owner of the mortgage dies, his or her heirs will be responsible for paying the debt and the guarantor remains as guarantor.
  • In the event that the guarantor dies, it will be his or her heirs who must assume the accepted commitment.

6. Documentation

The papers to apply for a mortgage can vary from one institution to another, but the most common are usually:

  • A valid NIF or DNI
  • Last income tax return
  • Updated curriculum summary
  • Deeds of real estate you own
  • Bank statements for the last 3 months
  • Most recent receipts for payments on your credits or loans
  • Rental contract and latest bills, if you have a lease
  • Any other supporting documentation related to additional income or earnings

When the application is online, you must digitize the documentation for that purpose. If you have questions about this process, do not hesitate to contact us.