Accessing Spanish property mortgages post-Brexit

Many Britons who visit Spain fall in love with this favourite destination, and many British citizens choose to to buy a second property here. This can be due to great value property prices compared to the United Kingdom, the mostly warm & sunny Mediterranean climate, the quality of stress-free life and the close proximity between Spain & the United Kingdom. These are the main reasons why British nationals choose to purchase a property from the Spanish real estate market.

In 2017, the Spanish real estate market was controlled by an excess of 100,000 foreign buyers, including British buyers. Data from the General Council of Notaries in Spain, has indicated that one in five property purchases were made by a foreign buyer. The biggest foreign market in Spanish real estate is the British (14% of the total real estate market), followed by French buyers (8% of the total real estate market) and Romanian buyers (7% of the total real estate market)

There has been no problems for British real estate buyers in Spain to obtain a mortgage. However, with Brexit looming, will this change?

In this article, our experienced consultants will answer some major questions about obtaining mortgages post-Brexit.

UPON BREXIT (29TH MARCH 2019), WILL BRITISH CITIZENS HAVE MODIFICATIONS TO THE TERMS OF ALREADY APPROVED SPANISH MORTGAGES?

It is highly likely that there will be no modifications for Spanish mortgages for British, or any foreign, real estate buyers. Not only would this be a massive undertaking for any Spanish bank to handle, but also no Spanish bank wants to nor can modify specific conditions already established before a Notary & the Spanish government.

WILL SPANISH MORTGAGES CONTINUE TO BE AVAILABLE FOR BRITISH CITIZENS POST-BREXIT?

There are already non-EU property buyers who do apply for and are granted mortgages by Spanish banks, so long as the mortgages guidelines are met. Therefore, a foreign citizen of any nationality in Spain can request a mortgage for non-residents, the United Kingdom included. Once again, the British property buyers market is too valuable for the Spanish economy and so it is counter-intuitive for Spain to reject British property buyers by not allowing access to Spanish mortgages.

Only citizens from countries that are on the watch list of the Bank of Spain cannot obtain a Spanish mortgage, due to a proper study on viability and money laundering not being able to be carried out. The United kingdom is not on this list, even after post-Brexit, so there will be no problem for Britons being granted a Spanish mortgage.

WILL THE CONDITIONS FOR SPANISH MORTGAGES BE TOUGHER FOR BRITISH CITIZENS?

The situation of Brexit means that there may be some changes for British citizens when acquiring Spanish mortgages, especially in the assessment of risks and flexibility on the part of Spanish banks. There are two situations that may develop because of Brexit, including:

  • A change in the legislation that currently allows European banks to pursue debtors in their country of origin.

For many years prior to Brexit, and still at this moment in time, in the case of non-payment of a mortgage loan, Spanish banks can issue a court order from Spain to the United Kingdom and enforce their rights in the country of residence of the debtors.

This system can change to better suit the Brexit situation, as the legislation that will be applied in this regard is not yet known, this will force banks to consider the same risk assessment as for non-EU foreign citizens.

  • Assessing of the economic situation of the British mortgage applicants.

Brexit is an unclear situation and how the economic situation of the United Kingdom will be after leaving the European Union is uncertain, which is why Spanish banks will have to take this situation into account and assess it as a risk more when granting a mortgage.

The United kingdom will complete its final stage of Brexit by leaving the European Union on March 29, 2019, after which there will be a subsequent period that the British Government has called an "implementation period" that will last until December 30, 2020, with the United Kingdom still in negotiations.

With the value of the Pound (£) still suffering from the 2016 referendum and current uncertainty of the future post-Brexit, Spanish bank have increased their risk assessment procedures and may impose greater requirements when granting a mortgage loan to British citizens.

THE OUTCOME OF MORTGAGES AVAILABILITY FOR BRITISH NATIONALS IN SPAIN

The situation of uncertainty from Brexit has not discourage British citizens from continuing to invest in the Spanish real estate market, and continue to be the biggest market for foreigners who purchase properties in Spain. There was an initial fall in British residents purchasing properties in Spain after the referendum in 2016 and the announcement of Brexit. Although, since the second half of 2017, real estate purchases by British nationals in Spain have recovered.

Despite the depreciation of the Pound (£) compared to before Brexit, the overall liquidity of British property buyers has not changed. Hence, Spanish property prices are typically lower compared to that of other European Union countries, still including in the United Kingdom for now.

Despite the uncertainty caused by the lack of agreements between the British Government and the European Union, and with so much market potential and ability for further property sales growth, some Spanish banks will not change their policies when granting mortgages to British nationals in the future, even after the Brexit deadline.


OUR SERVICES

At PSI Consultants, our experienced legal, fiscal & visa experts can help you acquire residency & nationality in Spain through property investment in Spain. We will guide you through the whole process of gaining Golden Visa residency in Spain and we offer a wide range of services related to the management and transmission of property ownership in our department dedicated to conveyancing, donations & inheritances. Also in our legal department we manage the obtaining of NIEs, Residences, Wills, private contracts, representation and personalized legal consultation on all related matters.

If you would like to learn more about our Spanish services in the Costa Blanca area, please feel free to contact us at any time when our office is open between 9am - 2:30-pm, Mondays to Fridays.


 

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Calle Salvador Dalí 8, Playa Flamenca, 03189, Orihuela Costa, Alicante, España
 

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Luke HoughtonComment