Mortgages in the Canary Islands

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Canary Islands Mortgages Guide

The Canary islands are a diverse archipelago of islands situated off west Africa, and owned by the Kingdom of Spain. Consisting of seven islands, with five regularly visited by tourists, the Canaries are a popular holiday destination for winter tourists from Europe.

The islands together form an autonomous community of Spain, and are a popular place for European buyers to purchase investment property and holiday homes.

The five most popular islands are:

• Fuerteventura
• Lanzarote
• Tenerife
• Gran Canaria
• La Palma

Fuerteventura Mortgages

Fuerteventura boasts hundreds of kilometres of pristine beaches, a vibrant culture and friendly people, and picture-perfect villages. Fuerteventura is the second largest island in the chain, and is swiftly becoming a desirable property hotspot. The local people, Majoreros, are welcoming to visitors and foreign property buyers in the region. Property hotspots include Puerto Del Rosario, Corralejo and Caleta de Fuste.

Buying a property in Fuerteventura requires putting down a deposit to secure the purchase – usually 10 per cent for a resale and 25 per cent for a new property. Contracts need to be drawn up, including completion date and payment method. Receipts and paperwork need to be checked.

As the property purchaser, a fee of 10 per cent of the declared value of the property will be due, although this is less for new homes. Applying for and getting a mortgage in Fuerteventura is fairly straightforward, although they usually don’t exceed 60 per cent of valuation price. Mortgages can be available within 10 days, and boast low interest rates.

Lanzarote Mortgages

Lanzarote is the most easterly of the Canary Islands , a dry volcanic island which is geographically closer to Africa than Spain . Lanzarote, sometimes called the Land of 100 Volcanoes, has beautiful black sand beaches, although many are covered by golden Saharan sand. The island offers an array of restaurants and tourist sites, from volcanic lakes to staggering cliffs.

When it comes to purchasing property in Lanzarote, non-residents are welcome to apply up to 70 per cent LTV. The process is simple and straightforward, similar to that employed in the United Kingdom . Banks provide buyers with a valuation, and estate agents handle many areas of the deal.

Local banks are clear on how the procedure for lending operates, and many are happy to lend to foreigners. Shopping around can secure the best rates, and local banks are often equipped to deal with English-speaking buyers. Local banks require standard paperwork such as payslips, passport and p60 etc.

Banks apply a fee of approximately 1 per cent of total borrowing, a sum which is usually added to the mortgage. Banks in Lanzarote typically make a mortgage decision within a few days.

Tenerife Mortgages

Tenerife has long been renowned as a beautiful holiday spot, not to mention an ideal site for a holiday investment. Boasting a beautiful climate and natural beauty, not to mention great diversity, Tenerife is also cosmopolitan and sophisticated, catering to a wide ethnic mix from Europe . The local people are well versed in English, and are welcoming to foreigners.

Buying property in Tenerife means arranging a Spanish mortgage loan, usually using a Spanish Bank. Non-residents are generally lent a limit of 60 per cent loan to value. Banks do not follow normal valuation procedure, and valuation price may be different to purchase price.

International property investors need to provide their bank with a proof of income and outgoings, to prove that they can meet repayments. Payslips and tax returns are the accepted norm.

Gran Canaria Mortgages

Gran Canaria is the largest of the Canary Islands , and one of the most rugged. To secure a mortgage on a house in Gran Canaria, a 10 per cent deposit is generally expected, climbing to 25 per cent for those purchasing new property. Contracts between the buyer and seller will specify completion date and the way in which the buyer is to pay.

Buyers investing in property in Gran Canaria will have to pay around 10 per cent of declared value on resale properties in tax. For new properties, this is slightly less, at 6 per cent. Gran Canaria mortgages typically take between 10 and 15 working days to complete. Local interest rates are extremely low, and are also tax deductible. However, local banks will only finance valuation price, not real purchase price.

La Palma Mortgages

La Palma has been known as a tourist and holidaymaker destination for decades, due to its nature, mountains and beaches. La Palma is nicknamed the ‘green island’ for its mountains. The island also has the highest altitudes on the entire globe relative to its size, and much of the island is covered by dense pine forest. The mountains of the islands soar to over 2,400 metres. With a population of 80,000 people, La Palma is less populated than the other Canary Islands . Getting a mortgage in La Palma is no more difficult than the other Canary Islands , but property is more scarce.