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Where in Spain is it easiest and hardest to repay a mortgage?

Find out where in Spain a mortgage is likely to eat up most of your monthly earnings.

Published: 2 January 2019 10:55 CET
Where in Spain is it easiest and hardest to repay a mortgage?
Málaga skyline. Photo: Paolo Trabattoni/Flickr

Madrid and Barcelona aren’t the cities in Spain where homeowners cough up the most for their mortgages. 

That’s according to a new study by Spanish finance evaluator Tinsa, who have drawn a ratio between average mortgage prices and monthly wages in different cities and provinces across Spain.

The Balearic Islands and Malaga, home to some of Spain’s biggest expat populations, are at the top of the leaderboard.

In the archipelago made up of Majorca, Menorca, Ibiza and Formentera the average financial burden for families dealing with their first year of mortgage repayments is of 23.5 percent.

The Balearics also had the highest average mortgage in Spain in the second trimester of 2018 – just over €175,000.

Malaga is next in line in terms of the chunk taken out of monthly wages devoted to mortgage repayment – 22.2 percent – even though the average property price in this city and province is seventh in the table.

In third position is Barcelona, where average mortgages stand at roughly €153,000, representing 18.2 percent of families’ monthly earnings.

Madrid presents perhaps the most interesting findings on the list, as although average home loans are the second highest in Spain (€172K), the financial burden to homeowners is less on average (9th in the table), largely due to higher wages in the Spanish capital.

Source: El País/Tinsa

Provinces in Spain where mortgage repayments represent the lowest burden for families include Tarragona , León, Huesca, Lugo (all at around 13 percent), Teruel, Alava, Palencia, Castellón and Soria (at around 12).

Most of these cities and the provinces in which they lie also have some of the lowest mortgage prices in Spain.

The average mortgage in Spain is €121,737, representing 17 percent of earnings before tax and deductions.

According to Spanish real estate valuation firm Sociedad de Tasación, Spaniards currently need to work an average of 7.6 years to repay their mortgages, that’s if all their wages were used for home loan repayments.

Using this calculation, anyone with a mortgage in the Balearics would need to work 15.4 years to pay it off whereas in La Rioja it would be just 4.8 years.

SEE ALSO: Spain's ten cheapest cities and why (or why not) you should move there

Average monthly mortgage repayments are around €850 in the Mediterranean archipelago, roughly €500 higher than in cities such as Cuenca, Lugo and Ciudad Real.

Homeowners in Madrid and Barcelona repay on average €739 and €731 a month respectively if they’ve taken out a loan.

READ ALSO: What you need to know about Spain's newest rent law changes 

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PROPERTY

Q&A: What to do if you buy a property built illegally in Spain

Buying an illegally built property in Spain is fairly common but can have several consequences down the line. Here's what you need to know, how to make it legal, whether you can sell it, and the benefits of doing so.

Published: 25 April 2024 09:35 CEST
Q&A: What to do if you buy a property built illegally in Spain

Unfortunately, over the years, many properties have been built illegally in Spain, not adhering to local rules and regulations. Foreigners who don’t know the legislation can easily fall into the trap of buying one of these properties, only to find out later down the line.

Maybe it’s when they come to sell or perhaps it’s when they want to do works or improvements on the property.

There are several reasons a home could have been built illegally in Spain. Firstly, it could have been built on the wrong type of land. This is it could have been built on suelo rústico, rural land where residential properties are prohibited, also called no urbanizable. 

READ ALSO:

It could have also been built too near the coast. This is down to the Ley de Costas or Coastal Law, which was brought into force in December 1989 in order to protect the costas from overdevelopment and high rises spoiling the landscape. 

The law defines different areas of the beach and dictates which is public land, owned by the state and which parts can be owned privately and built on.

If you buy or own a house in one of these non-buildable zones, there are many problems you could face down the line, often sooner rather than later. This is because there are several rules you have to abide by concerning works, reforms and extensions. In some cases, they may not be allowed at all and everything must be approved first by the local government by providing a detailed project.

Because of coastal erosion, this issue is getting worse as some shoreside homes that were once built outside of these areas are finding that they’re now illegal.

READ ALSO: 

The house may have also had extensions made to it that were built without a license, meaning that the extra parts are illegal.

Q: How do I know if my home is legal or not?

A: Unfortunately it can be difficult to know if your property is legal or not. You could have bought and signed for it with a notary and it could be inscribed on the Property Registry, but this still doesn’t mean it was built to the correct specification and on the right land.

The only way to truly tell is to find out if your home ever had a Licencia de Primera Ocupación or First Occupation license, also referred to as a Cédula de Habitabilidad or Certificate of Habitability. This means that according to the authorities, it is suitable to live in and has the correct licenses.

READ ALSO: How to get Spain’s certificate of liveability for properties

Q: What happens if my property doesn’t have a habitability certificate?

A: If your property has never had a Certificate of Habitability, you must regularise the legal situation. First you’ll need to start a legalisation file (expediente de legalización) and contact the town hall. Depending on the seriousness of the case (ie. where exactly it was built, if there’s any structural danger, whether the entire property is illegal or just an extension) the cost of making an illegal property legal can be considerable. As such, each case must be studied individually with the help of an expert to determine whether it is even feasible or worth the investment.

The next step is to bring in an architect and check whether the property complies with all the building regulations. If it does, you simply need present the expediente de legalización to your local town hall, who will confirm whether or not the property adheres to building regulations and can be made legal.

If it doesn’t, you’ll need to consider whether it will comply with the regulations after some renovations. If that’s the case, you’ll need to draw up a renovations project document (proyecto de reforma) outlining the proposed changes and how they will adhere to building regulations. It must be presented to the town hall along with your expediente de legalización.

According to law firm Acal, the legalisation process can be broken down into steps as follows:

  • Contact the town hall.
  • Begin with the expediente de legalización when the town hall confirm whether or not the property can be made legal.
  • Pay the corresponding fees and taxes (in this case it will be IBI) depending on your municipality and region.
  • If you need to make renovations, obtain the proyecto de reforma and hire an architect.
  • Obtain a building permit from the town hall.
  • Once completed, register the property in the Land Registry.

READ ALSO: What is Spain’s IBI tax and how do I pay it?

Q: Do I really need to make my property legal?

A: Yes, because it will benefit you in the long run. It doesn’t matter what the previous owner told you when you were originally buying the property, owning a property that isn’t fully legal (or legal at all) can create problems and even lead to fines worth up to 20 percent of the property’s value in extreme cases.

By going through the legalisation process and making the relevant renovations, if necessary, you gain a legal property for all purposes and with all the benefits that entails.

You will not have problems setting up, paying, or cancelling electricity, water or gas utility services. You won’t have to undertake reforms and renovation work unofficially, avoiding the eyes of the authorities. Instead you’ll be able to register your property in the Land Registry, which will make things much easier when you decide to sell it or pass it on.

In terms of selling it, perhaps that is the biggest benefit of legalising your illegal property: by registering it properly, you will be able to benefit from its full value when selling it. When a property is illegal, the appraised value will probably be no more than 40-45 percent of its real value at best.

The renovations needed to get your property in shape to meet the building regulations could be costly, but will they cost you half of the total value of your property? 

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