Many people will wait until later life to fulfill their dream of relocating to Spain, or owning their own Spanish holiday home. The fact is that it is becoming increasingly common for people to make big life changes in later life, no doubt supported by the fact that we are generally retiring later, staying active longer, and remaining in good health until a much older age. Many people choose to continue working well into their 70s, whilst others wish to retire early and enjoy the fruits of their labour. But how could opting for a later retirement date impact whether or not you can secure a mortgage? Is there a maximum age to secure a mortgage in Spain? How old is too old? Here’s everything you need to know about securing a Spanish mortgage later in life:
Why Might Over 50s Be Looking for a Mortgage?
There are many reasons why individuals both from within Spain and outside it might be looking to secure a mortgage in the country in later life. These include but are not limited to, the desire to buy a second home, upsize, or invest in property. Many will need a loan to help them to turn these dreams into a reality, and the good news is that if you meet the right criteria, this should be possible.
What is the Maximum Legal Age for a Mortgage in Spain?
The good news is that there is no maximum age for securing a mortgage in Spanish legislation. However, that doesn’t mean there is no upper limit in practice, with the majority of Spanish banks limiting the terms of a mortgage offer to ensure that the mortgage is repaid by the time the borrower reaches even 70 or 75 years of age. However, given that most banks will offer mortgages with terms as short as five years, that does mean that it is possible to secure the mortgage you need as an older applicant. If you’re still working, then your income will be taken into account and if not, then your pension income will be an important part of your application.
When thinking about the maximum age for securing a mortgage in Spain, a rule of thumb to bear in mind is that the older you are, the shorter the term of your mortgage will be, and therefore the higher your monthly repayments will be.
How Will This Impact Non-Residents?
If you’re a fiscal resident of Spain then, although they are rare, it is possible to secure a 30-year loan at 50 that will last until you are 80 years old. If you are a non-resident, then it is more likely that that you will only be able to secure a loan until you are 75 by taking out a 20-year mortgage at the age of 55.
How Can You Demonstrate That You Meet the Income Requirements?
If you are resident in Spain, then the official retirement age is 67 years old. For this reason, most banks assume that this is the age at which their clients will retire, even if you say you are intending to work for longer than this. If you need your mortgage term to last beyond the age of 67 then you’ll need to meet the bank’s affordability criteria taking into account both your employed or self-employed income (if you’re still working) and, more importantly, the anticipated retirement income from age 67 if you were to retire. You can demonstrate this by showing your pension or retirement income, which will reassure your bank that even if you do stop working, you will still have the means you need to pay your mortgage.
How Do Older Mortgage Applicants Demonstrate They Can Afford Their Mortgage?
Now that you’ve ascertained that you can secure the mortgage you need to make your property dreams a reality, how do you demonstrate that you can afford it? Much like the age required for securing a mortgage, the criteria will vary depending on the bank, but you should expect the same one-third requirement to be applied to individual of pension age as it does to individuals who are employed or self-employed. In practice, this means that the total of your existing debts, significant expenses (rent and alimony, for example) and the new repayment that you would pay if you secure the mortgage cannot exceed one-third of your monthly outgoings.
Your bank may also choose to protect their investment by asking for other guarantees. This includes having to secure a mortgage guarantor, which some home buyers can find off-putting. As a general rule, you shouldn’t expect to qualify for a mortgage beyond the age of 75 in Spain, so if you’re 65 then the maximum mortgage term that you could expect to be offered is 10 years, but if you need longer than this then a specialist mortgage broker may be able to offer the help you need.
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