The word mortgage has taken on a deeper meaning for many in Spain. While buying a home remains a natural milestone, changing economic conditions and stricter lending criteria have made the process more complex and challenging. So what exactly do banks look for when they decide to grant a mortgage?
The development of mortgages in Spain
Mortgages in Spain are currently facing tighter conditions. Data from the National Institute of Statistics show a notable drop in mortgage activity, with a decline of 18.83 percent from the previous year. As of July 2023, 29,223 new mortgages had been signed. Several factors drive this trend, including job insecurity and rising interest rates, which affect both the availability of credit and the affordability of monthly payments.
Ideal profile to get a mortgage
Many people wonder what constitutes the ideal borrower in Spain. The primary aim for banks when lending for a home is that the monthly mortgage payment can be afforded comfortably by the borrower. Economic stability and steady employment are top priorities for lenders. A reliable income stream and a track record of stable work help explain why lenders are more willing to approve a loan.
In practical terms, the typical borrower in Spain tends to be around 37 years old, with a net monthly salary of about 2,450 euros and more than seven years of work experience. A common pattern is that most mortgage holders borrow as a couple, combining incomes to improve the qualification for the loan.
Lenders have also tightened the amount they are willing to lend. Full financing of a property is now rare; 80 percent financing has become the new standard in many cases, with down payments and other considerations shaping the final loan terms.
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The ideal candidates for a mortgage in Spain
Every situation has its own nuances, but certain profiles tend to receive favorable consideration when applying for a mortgage. The following groups are often viewed as strong applicants:
- The salaries of civil servants are highly regarded because their incomes are fixed and the risk of default is perceived as low.
- Permanent contract workers are generally favored, especially when the contract extends for at least a year.
- Temporary workers can still qualify, but the employer and industry matter. Sectors such as education and health are commonly preferred.
- Self-employed individuals can secure a mortgage, particularly when they can demonstrate consistent income and solvency over time.
In short, while the mortgage landscape in Spain has become more demanding, being well informed and understanding the profiles banks favor can make the difference between success and rejection. Wishing hopeful buyers good luck on their mortgage journey.