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How to get a mortgage in Spain if you don’t have a job contract

It can be difficult enough to get a mortgage in Spain, but what about if you're not a full-time employee? Can you still get a mortgage if you’re self-employed or if you receive passive income from within Spain or abroad?

How to get a mortgage in Spain if you don't have a job contract
A woman exits a branch of Spain's BBVA bank. According to Helpmycash.com, BBVA is one of only a few banks in Spain actively advertising mortgages for self-employed workers. (Photo by DANIEL GARCIA / AFP)

Spanish banks don’t typically look favourably on autónomos (self-employed workers) or those without a steady contract when it comes to granting a mortgage.

Even if they have fairly good revenue streams, they tend to see them as a bigger risk that low-paid contract workers.

That’s largely because self-employed workers rarely get paid the same amount each month, they don’t always know how much they’re going to earn each month and in a job market and economy as volatile as Spain’s can be, that doesn’t convince banks.

However, it is possible to get a mortgage with a Spanish bank if you don’t have a job contract, even though admittedly it can be tough to get, and you’ll need a lot of documentation to prove your case.

What factors will be in my favour?

Monthly earnings

Firstly, you’ll have to show high monthly earnings, even if you don’t earn the same amount each month. The bank must analyse the amount of risk you as a client pose, and if you can prove that you’ve maintained a high level of income for a long period of time, and it’s been consistent, it will play in your favour.

READ ALSO: Why mortgage payments in Spain could increase by up to €120 a month

Your type of business or stream of income

The type of business you have, the sector you work in or where you get your passive income can also play a big role in whether the banks decide to give you a mortgage or not.

Some industries are naturally seen as riskier than others, there’s even the chance that your field may not be understood completely by your bank manager. For example, if you make your money blogging or making YouTube videos, the bank may not completely understand how and where you get your money and therefore not be so willing to give you a mortgage.

According to Infoautónomos, the website designed to help the self-employed in Spain:In an ideal world, the manager would know the world of our business and could analyse the situation properly. The reality is that they usually have little idea of ​​how companies in our industry work”.

Therefore, explaining your business in a clear way with lots of evidence and documentation will help your case.

READ ALSO: How to rent a property in Spain if you don’t have a job contract

How long you’ve had your business for

It’s unlikely that banks will bet on someone who has only been self-employed or had their business for a couple of years.

You need to show that you can make your business a success over a long period of time and prove that you will do so in the future too. It also shows banks you can make a commitment and stick to it. This will prove that your business is resilient, possibly even through tough economic times such as the Covid-19 pandemic for example.

READ ALSO – Property in Spain: What you need to know before making a down payment

Agreeing to lower monthly payments

You’ll probably have to agree to a lower monthly mortgage payment than those who have a full-time contract so that the banks will know you’ll be able to cough up each month. Your payments can’t be more than 40 percent of your average monthly earnings.

This does mean though that you’ll be paying mortgage payments and the corresponding interest for a longer period of time.

No outstanding debts or loans

It’s important that you don’t have any outstanding debts or ongoing loans, this is also the case if you’re an employee with a fixed salary.

You will need to prove to the bank that you don’t already owe lots of money and that you’re a trustworthy candidate for one of their mortgages. 

A big deposit

Banks will typically only finance up to 80 percent of a property, so you’ll need to make sure you have a sizeable amount of money saved up as a down payment.

If you can get yourself an even larger deposit, bigger than 20 percent, this will definitely be looked upon favourably and put you in better standing as you’ll have to borrow less. 

A guarantor or guarantee

If the bank still thinks you’re too much of a liability you could try providing a mortgage guarantee (aval hipotecario) or a guarantor who will cover your mortgage payments if you are no longer able to pay. For many though, this will obviously be very difficult to find. 

What documents will I need to take to the bank and state my case?

According to Spanish bank BBVA, when requesting a mortgage loan: “you must be well prepared, with documentation that reflects, in the most detailed way possible, the income you have and the guarantees that can be provided”. They are reported to be one of only a few banks in Spain actively advertising mortgages for self-employed workers

The bank’s website states that you must provide:

  • A dossier with information about your business or where your money comes from with all the particular details about how much you earn, how long your business has been operational and how successful it is. It must also include information on client relations, what projects you’re planning for the future and the probability of them working out or not.
  • Your last year’s tax return and possibly ones before that too, showing the exact amounts you earned. 
  • A breakdown of all your accounts in detail, including incomings, outgoings, costs etc.
  • Proof of how much savings you have and how much you are able to save each month by showing your bank statements – both your personal bank accounts and your business ones if they are separate.
  • Receipts and proof of any loans you have, both personally or as a business.
  • A report on your working life, such as previous jobs you’ve had or previous businesses you’ve started. Essentially, you need to provide something similar to your CV so the banks can see what type of professional person you are. 

Any extra information you can provide on your business or your passive income will help. Remember, the more paperwork, the better. 

Other banks ask for similar proof and documents, but remember to contact each one beforehand in case they require anything extra. You want to go in as prepared as possible. 

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PROPERTY

How does Spain’s new website to find cheap homes up for auction work?

Spain’s Tax Agency has created a new web page where you can find great bargains on properties sold at auction. Here’s what you need to know.

How does Spain's new website to find cheap homes up for auction work?

If you’re looking for a property to buy in Spain, one option you may want to consider is buying a home at auction, where you will often pay below the market value.

In Spain, the Agencia Tributaria or Tax Agency owns many properties, most of which have been repossessed or seized due to outstanding debt.

Many of these properties are put up for auction, enabling you to get some great bargains. Up until now, it has been difficult to find out when these auctions are held and the details of the homes being sold, but recently the Agencia Tributaria launched a new web page providing all this information.

The page provides details on all the properties in all the different provinces across the country and is dedicated to the sale of homes, garages, plots of land and commercial spaces with prices from just €20,000. You can access the site here

When you get to the page, simply click on the province that you’re interested in and you’ll find a list of all the properties to be sold at auction there, including photos, information on the size and number of rooms, a description, and a guide price.

The site will also give you financial information such as the minimum bid amount, the auction value and an appraisal of the property.

When you find some properties that you’re interested in, you can go and log-in with your [email protected] PIN to save them to your favourites list and receive notifications to your phone about the date of the auction.

READ ALSO: How to save lots of time on official matters through Spain’s online [email protected] system

According to property giant Idealista in order to place a bid, you must pay 5 percent of the starting price and when the auction is over, if you are the highest bidder, you will have to pay the remaining amount within a particular time frame. You can pay this in cash or through a mortgage. 

Be aware that you may also have to pay several fees, as well as the price of the property such as the Patrimonial Transfer Tax and Tax on Documented Legal Acts. 

If you register on the Auction Portal with your digital certificate or a username and password, you will also be able to see the bids that have already been made on the home, as well as the cadastral reference. You may also be able to place provisional bids ahead of time.

For those who are unsure of how the auction process works in Spain or are nervous about going to their first auction, the Tax Agency website also details all the auction and bidding procedures. For any other information that you can’t find online, you can call 91 598 63 34.

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