With businesses now reopening across Gran Canaria, new ways of working are set to improve customer experience. The island's estate agencies are leading the way.
The post-Coronavirus world may seem like an endless series of queues and a constant routine of masks, gloves and hydroalcohol gel but much more is happening behind the scenes. The need to guarantee safety and reduce unecessary procedures means that Gran Canaria businesses are rethinking the way things are done.
For example, in real estate the number of physical bits of paper needed for property transactions has dropped fast. Digital signatures mean buyers and sellers don't have to visit as many offices and can even buy or sell from abroad. The property registry and other government departments now offer more online services and legaly valid digital documents.
The virtual visit or 3D tour is now a standard feature of all quality estate agencies in Gran Canaria and allow buyers to view properties from home and visit only the ones they want to see in real life.
With more of the process of buying and selling property moving online and going digital, it is ever more important to choose a quality estate agency to guide you through the process.
Ramón Sánchez Bruhn, Marketing & Productivity Manager at leading south Gran Canaria estate agency Cárdenas Real Estate, told us that "the real estate business is all about service and trust and this means people must meet and talk openly. If this isn't possible physically, we have the technology to help us; shared documents, walk through visits in real time, live video calls, all these things allow us to be open with our clients".
As Gran Canaria estate agent Laura Leyshon confirmed, "it's not just about the technology, its about using it to talk and share opinions. I can walk buyers through properties and answer their questions in real time and that really helps me to understand their needs".
Getting a mortgage as a Gran Canaria resident is not a complex process but you do need to do a fair amount of paperwork and have a decent amount of cash to cover the deposit and fees.
Article by Las Palmas estate agent Laura Leyshon.
To get a mortgage you must have a 10-20% cash deposit (plus the 10% in cash that it costs to buy a property in Gran Canaria) and prove to the bank that you can make the repayments. In general, they only lend if your liabilities (existing loans, mortgage payments) represent less than 35% of your monthly income.
For example, if you want to take out a mortgage which will be 350 euros a month, you must earn 1000 euros a month and not have any other loan payments. They will check your ability to pay by requesting the following documentation…
As always, you will need to feed the photocopier with your ID, residencia and the one piece of paper you didn’t bring with you.
Banks in Gran Canaria do NOT take future rental income into account when calculating the amount of money they will lend you to buy a property.
Spanish banks currently offer mortgages of 60-80% of what a property valuation firm says that it is worth (you pay about 300 euros for this valuation as part of the mortgage application process).
Most banks offer variable rate mortgages that last from between 12 and 40 years. Fixed rate mortgages have been at histrically low rates for several years but have risen in 2022.
Interest rates in Spain vary, but are generally a little lower than in the UK. The rate is set using the EURIBOR interest rate published by the European Money Market Institute.
Your mortgage rate will be expressed as EURIBOR plus a percentage (eg. Euribor más 0.75%) and varies depending on whether the EURIBOR rises or falls. With the rate currently negative, mortgages in Spain are at rock bottom levels.
It is always worth applying to several banks (you only have to gather the paperwork once) as the rate, property valuation, and other conditions vary considerably between banks and you never quite know what headquarters in Madrid (all applications are sent to Madrid for approval) will say.
There is no harm in playing the banks off against each other.
Ask for a copy of one bank’s offer and then take it to a different bank to see if they can improve the offer – they often will. Then take the improved offer back to the original bank – you may get a pleasant surprise.
During the mortgage application process, you have to pay for a valuation by a professional valuation firm (200-300 euros) and you will also pay a gestoria (bureaucracy consultant/paperwork company) to handle all the paperwork (around 250 euros); your bank will assign one, you’ll pay for it.
Spanish banks have a habit of attaching other products to their mortgages to boost their profits. For example, you will have to pay for annual life insurance that covers the entire mortgage, and property insurance that covers its replacement value in the case of a fire, etc. Often you get the best interest rates if you agree to their add-ons.
Non-residents need a minimum deposit of 30% plus the 10% in fees and taxes that you need to buy a property. That’s a minimum of 40% of the value of a property befoe you can get a mortgage as a non-resident.
You may also be asked to provide an aval (guarantor). This will be somebody usually based in Spain who agrees to pay in the event of you being unable to.
Save money on transfers by using a currency broker like Currencies Direct if you are from a non-Euro country. They are far better value for money thank banks.
As well as paying slightly more IPT tax (7% rather than 6.5%), buying a new build property has the disadvantage that the constructor (builder) or promotor (promoter) often has a mortgage deal agreed with a particular bank. The rates and conditions are fixed and you have to accept them.
With rates as low as they are at the moment, there is rarely much benefit to changing your mortgage provider as the process is long and expensive (fees are around €3000). However, if you are locked into a mortgage with high rates, it is worth looking into.
Spanish banks used to put a floor under the interest rate on their mortgages which basically locked in their profits if interest rates dropped. However, the EU has ruled this floor, known as the clausula suelo, illegal and told the banks to scrap it and TO RETURN ALL THE EXTRA, ILLEGAL INTEREST THEY COLLECTED.
If you have a mortgage in Spain with a clausula suelo, you are entitled to go to your bank and demand that they return all the excess interest you paid over the years.
These sums can be substantial so don’t expect your bank to hand it over without a scrap; They aren’t exactly falling all over each other to obey the courts.
Rather than give you the cash, the bank knocks what they owe you off the outstanding mortgage debt.
For the latest on this story, please read this article.
Mortgage offers change all the time so we recommend that you shop around extensively and apply at several different types of bank…
The traditional Spanish banks such as BBVA and Santander
The local banks such as Bankia and / or a Spanish caja (equivalent to a building society and just as endangered).
A foreign bank such as Bankinter and Deutsche Bank
An alternative bank such as EVO.
Online banks such as ING Direct.
Specialist mortgage brokers that work with estate agents rather than retail banks.
If you speak fluent Spanish and know the local property market, feel free to ignore this advice and use a local mortgage broker or go direct to the banks.
Use a good local estate agent when you buy a Gran Canaria property: They will help you with the process of getting a Gran Canaria mortgage and make sure that you pay a fair price for your property.
Best of all, estate agency services are free for the buyer as the seller pays all their fees.
In Las Palmas and north Gran Canaria, talk to me at Las Palmas Property.
In south Gran Canaria, just go to Cárdenas Real Estate.