Easy 7 Step Guide: Taking Out a Mortgage in Spain

Oh man, I'm so stressed out. I didn't even realise it until the other day. This mortgage thing is driving me INSANE, I cannot wait for it to be over. This is how it has gone for us:

Step 1: Here in Spain they won't look askance at giving you a mortgage until you've already paid a deposit on a house. So step one is househunting. Anybody that has ever done it knows how much of a drag that is. I solved that particular problem by setting a "Two viewing sessions a week" rule. No more than two nights a week looking at properties, because otherwise your social life is dead in the water, the laundry and dishes pile up, you only have time to wash your hair once a week, and your blood pressure rises to about 3000 mmHg. So using the very advanced and soon to be patented "Two Nights a Week" system, we managed to find a very well-located, large (for us), and thankfully well priced apartment. After knocking 8 grand off the asking price (gotta love a buyer's market), we had this bit done and dusted.

Step 2: Round one of the banks. In reality this step begins halfway through step one, but I'm not in the mood to make a flowchart, so you're just gonna have to imagine it. You go to all the different banks you can find, talk to the manager, and they give you glossy brochures indicating the conditions of the extremely competitive mortgages they are offering. This step is a pain in the arse in every possible way, and also, we found out later, essentially useless because they tell you the advertised interest rates (very attractive) which they only actually give to extremely rich people or the son of the bank manager. In reality they will find any reason to disqualify you for that mortgage package and charge you a king's ransom in fees and interest rates. Therefore, take note, fellow property investors, next time around I will skip this step, and go straight for step 4, but somewhere in here you gotta...

Step 3) Pay the deposit on the house. You agree to the price, and put down 10% of this amount. In return the vendors promise not to sell it to anyone else. If you don't end up buying it, you forfeit the money. If the vendors sell it to someone else, they have to pay you back double. Sounds like a pretty sweet deal, until you realise that to take out the mortgage, you have to have this signed. So, not only do you have to commit to buying a house you are not at all sure you can pay for, you have to agree to a date by which to have the house bought (in our case, July 31). You don't have the money by then, you lose the deposit, but the sign date is completely out of your control and you are at the mercy of the banks which as we all know, are generally risk-averse, cautious, and very, very slow to get anything done. Why can't you set a date for sometime in 2050? Because after years of property boom in Spain, when some properties were bought within hours of coming onto the market, the system hasn't changed and the expectations of the seller are still the same. So if you ask for too much time, they just tell you to jump in the lake and sell it to someone who will commit to the money faster. It's nonsense, but it's the way it is.

Step 4: Round 2 of banks: Begin taking the mortgage out with several banks, and thus find out the REAL conditions they are offering. If I told you that this step involved a mountain of paperwork, I would be underselling it. Thank god for the 21st century and the prevalence of scanners and Adobe Reader, or I would have felled the Daintree with all the photocopies. Deposit contract, ID, work contracts, registration documents of the property of we are buying, six months of bank statements, work history, job contracts of our two previous employments, three payslips, plus all of this again for Erik's parents who have kindly agreed to be guarantors, registration documents of their assets, on and on ad nauseum. I understand that there will be some red tape involved if someone (or thing) is going to lend you an exhorbitant amount of money, but by the sixth time they come back to you for more documentation, your heart really does begin to sink a bit.

Step 5: Denials. Not that there are not acceptations as well, but the denials come faster. And thicker. Bank employees know a lost cause when they see one, and the Spanish character makes it impossible for them to work on something one second more than they absolutely have to. This means that if you're out, you know it straight away.

Step 6: The waiting game. After you have sent in all the papers (or, what they said was all the papers, just you wait, sucker!) you sit back and wait for Mr. and Ms. Actuary Risk Assessors in the bank to decide whether you are risky business or not. Will you default on your mortgage? Will you go bankrupt? Will you spend your life savings on a once-in-a-lifetime trip to Antartica from which you never return? These are the important questions that face the Risks department every day. More often than not the only thing you hear from them is requests for more paper, and other than that communication is scarce. From the beginning of step 4 to here will take 3-4 weeks. Every day within those weeks will be filled with anxiety. Your fingers will tap, your stomach will knot, your concentration at work will wane, and you will lose sleep. But with luck, and a healthy salary, you should be able to make it to...

Step 7: Acceptation! Congratulations, say hello to your brand new baby mortgage! I can't really tell you much about this step yet, but I hope to fill you in once I get there...

The most money I've ever held in my hand

Must be funny, in a rich man's world

We found a house we want to buy! It's in a great, family-oriented neighbourhood, right off the main (pedestrian) street, very close to my workplace and the metro, and about 70 square metres for the both of us. Yes, it's very exciting but it is yet another disheartening anecdote which proves that intentions are not always matched with ability. Of course we would love to buy the place - the banks do not exactly share our enthusiasm, or confidence in our financial situation. Apparently, to be trustworthy in the eyes of a recessionary bank, you have to be working in the same job on a long term contract for two years. Just moved to Spain? Fuggedabadit. So we are busting our chops to prove (via email and internet forms) to the Risk department of several Spanish (and English) banks that we are really reliable people who make plenty of money and will not be losing our jobs any time soon. This is even more difficult than it sounds. It is so much easier to say "No, we won't help you take the first step into the property market" to someone whose face you have never seen, and so much harder to convince someone you are reliable, hard-working and trustworthy when your disarming smile and likeable manner cannot be used as persuasion tools.

That said, should everything work out, I will finally have a good comeback for all those annoying "So, when is the wedding?" comments. 'Cause in my eyes, a mortgage is a way more binding commitment than a marriage. Who needs to trade shiny rings when you share a "think about it too much and you'll break into a cold sweat"-size debt?

The Poland trip is coming along too. I have a vague itinerary, you can look at it here. I have 16 days to squeeze all that in! Anyone who has been to Poland, tell me which of these I can leave out... I would leave out Krakow for fear of multitudes of tourists but cannot resist the lure of the Tartars or miss a chance to visit Auschwitz. I wasn't going to go, after having experienced Dachau and the subsequent depression, but I think it's something one should see and dwell on for a while. Most of all, I'm looking forward to travelling by myself; I haven't done that since the Americas in 2005/2006 and that was one of the best trips of my life. No compromises, suckah! Erik will be rallying it up in Asia, so I don't have to worry about him. Well, I don't have to worry about him being lonely, I still have to worry that he will get arrested in Glormenistan (or something) for making fun of a police officer (or similar "crime") and given a life sentence with no conjugal visits. And that he will have left me to pay the mortgage, which is clearly the important thing here.