For the time being, the COVID-19 crisis has not changed the risk criteria for mortgages in Spain. The banks have kept their eligibility criteria stable and the current situation has not had an impact on the offers they have for their clients. In addition, new applications are perhaps being analysed a little more carefully, but without a radical change in their mortgage granting policy.
However, as in all sectors, lenders will be very attentive to how this whole situation of uncertainty evolves, and their criteria may change overnight. The greatest concern is the potential impact on consumers' purchasing power, both through a reduction in their disposable income and through possible job losses, making searching for a mortgage in the current climate more complex.
idealista/hipotecas highlights that the main criteria that an entity will analyse to see if it will grant the loan is to see if potential mortgage holders can pay the corresponding loan fee every month. For it they will analyse:
- Debt: all declared income will be studied
- Other income, such as rental income, capital rents, pensions, etc., provided that, as in the previous cases, they are declared and can be justified. In order to calculate the level of debt the income of the family unit will be added up and the quota of the loan cannot represent more than 35-40%
- Default history: both Equifax and Experian will request information from us to learn about a potential client’s default history. It is a file that contains information on the debtor's unpaid credit operation and the historical evolution of debt. Lenders will also request your CIRBE (risk information) from the Bank of Spain. The Bank of Spain's Central Risk Information (CIR) collects the credit history of individuals and companies.
The risks declared by the entities are classified into two groups:
- Direct risks: loans, credits, bank guarantees, leasing, fixed-income securities held by the entity.
- Indirect risks: these are when you guarantee or endorse other people who have granted loans or credits.
The following factors will also be considered:
- Percentage over appraisal: In mortgage loans for the purchase of a home, most institutions will not exceed 80% of the appraisal value.
- Working life: the bank will take into account your work history, seniority in a company, continuous work life, periods of unemployment, work sector, etc.
- Type of contract: indefinite, temporary, civil servant, interim, self-employed, etc.
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