Loans in Spain

Banco Santander, which began operations in Santander in 1857, is the biggest bank in Spain. With a focus on growth via acquisitions, the Spanish banking business has been busy since the year 2000.

It serves customers all around the world, including in Europe, South America, North America, and Asia. This company was placed #37 on Forbes’ Global 2000 list of the largest public firms in the world in May of 2016.

Advantages:

The Primary Advantages of Bank Loans More Than Debt Securities

• The variety of deal sizes (from small to large debt volumes).
• Bank loan conditions are more malleable, allowing them to be adjusted to meet the requirements of individual borrowers and projects.
• The terms and timing of bank loans are independent of those found in the debt capital markets.
• There is no need for a prospectus, registration, or listing.
• There is a significant difference between the reporting duties associated with issuing debt instruments and the information commitments associated with doing so.
• Waivers, revisions, and even a reorganization of the transaction are simpler to seek and secure.
• The duration of time required to complete the transaction is reduced.
• Loans from banks must be kept private.

Advantages & Disadvantages of Getting Loans In Spain

• The Advantages

Bigger budget

The ability to afford a larger or otherwise superior home is perhaps the largest perk. The extra money might make all the difference between an ordinary house and a dream home in locations that are sought after by international buyers. Don’t get your hopes up too high, however; most Spanish financial institutions won’t lend more than 60% of a property’s worth to non-locals.

More potential profit

Using a mortgage to acquire a property allows the buyer to put less of their own money into the transaction and offers the buyer more bargaining power in the eventual sale. When borrowing rates are low and real estate values are growing, investors should expect healthy profit margins (as is the case with the Costa del Sol property market in 2020). No one can say for sure that interest rates will remain low or that prices will continue to grow.

Extra due diligence

Before approving a mortgage loan in Spain, the lending institution will do a thorough evaluation of the property, including a check for any potential legal issues. This is an additional step in doing your due diligence on the property, however, a complete set of checks should have been performed if you’re using a lawyer to help with the acquisition. Connect to the buying procedure.

• The Disadvantages

More Costs

The taxes and fees added to the price of a Spanish home are already rather substantial. This is exacerbated by the addition of mortgage payments. The expenses associated with a mortgage in Spain are broken out in further detail below.

Higher Risk

You can’t predict the future of your finances, therefore you may not always be able to afford your mortgage. Changes in interest rates are a regular occurrence. Even while the Euribor (the mortgage interest reference rate for Spain) is now at a record low, that may not be the case in the future. There is always a rise and fall in real estate values. Many Spanish homeowners with mortgages had negative equity during the recent crisis, although the market has since recovered. There is no assurance that this won’t occur again.

Personal liability

Mortgage debt in Spain is considered to be a private and illimitable obligation. This implies that the bank has the right to go after any of your assets, not only the Spanish property, in the event of a failure of payments. If the proceeds from the sale of your repossessed Spanish home are insufficient to pay off your mortgage, the bank might pursue any assets you have outside of Spain to satisfy the obligation.

Bottom line

You should evaluate your financial situation thoroughly and create a sensible spending plan for the acquisition. An intelligent financial move would be to acquire a Spanish mortgage if you are certain that you will be able to keep up with the monthly payments even if interest rates increase or your circumstances change. However, if you can’t, then it’s not to your best advantage to take out a loan.

Loans and Repayments For Outsiders

Given the above, it seems evident that you should apply for a mortgage in Spain rather than with a lender from your own country. Not only because it’s the cheapest option overall and might help you save money (as we’ve shown), but also because it simplifies the administrative process.

Loan with Your Spanish Mortgage?

When purchasing a bank-repossessed home, a buyer may be able to get a loan guaranteeing the whole purchase price. An important term to remember is “loan-to-value,” which refers to the ratio of the amount borrowed to the property’s worth. Moreover, it has decreased considerably since the implementation of the new legislation we discussed.

Interest Amount You Can Get

The two main types of mortgages available here are fixed and variable. The interest rate on a fixed loan will be between two and four percent, while the interest rate on a variable loan will vary based on the Euribor and the buyer’s credit score (the variable rate will be compounded daily).

Car Loan in Spain

What is a car loan in Spain? If you have no money and want a new car in Spain, a car loans in Spain can help you buy it – whether the vehicle is new or used. If you get a car loan in Spain, you get money from the lender to buy the car. You must agree to the terms that you will repay the funds within a certain period of time, plus any fees and interest that have been agreed upon.

Types of car financing in Spain

There are 2 types of financing in Spain that you must consider if you decide to buy:

Bank car loans in Spain.

This is the most common loan application used to buy a new car in Spain. Some banks already offer the option of a car loan that is specifically intended for the purchase of a vehicle and that carries a fixed interest rate. This method of financing your new car allows you to buy a car from a dealer and pay for it immediately while repaying the loan to the bank in installments agreed upon in the contract.

Financing offered to you by the dealer

For several years now, manufacturers have been offering an internal financing service offered by the brand itself through its distributors. , especially for buying a car. In addition to offers, this type of financing includes a higher interest rate than with a bank and can present obstacles when it comes to paying off the loan before the contract expires. They also do not allow you in many cases to sell the car before the end of the financing, because the car book is not with you but with the bank.

Common Forms of Bank Loan Facilities

Term loans and credit facilities, which allow the borrower to re-borrow sums previously prepaid, are the most prevalent types of bank lending facilities.

Term loans, credit facilities, issuance of letters of credit normally issued, upon request from the borrower, to specified beneficiaries by one or more issuing banks lenders under the facility, and ancillary banking products and services like factoring and confirming are all examples of the types of loans and sub-facilities that can be included in a bank loan in Spain facility.

Describe the types of investors that participate in bank loan financings and the overlap with the investors that participate in debt securities financings

Bank loan financings often attract institutional investors from the banking and credit sectors. Direct lending operations to Spanish borrowers have been undertaken by new companies in recent years, mostly alternative investment funds.

Direct lending participants’ offer is, nonetheless, complementary to bank loan financings. Over the next several years, direct lending participants are predicted to grow both the size of the sums they fund and the depth of their specialization. Private and institutional investors are the usual backers of debt securities financings.

How are the terms of a bank loan facility affected by the type of investors participating in such a facility?

The objective and characteristics of each transaction, as well as the kind of investors involved, determine the specifics of the conditions of bank lending facilities issued in Spain. If the bank loan facility is granted bilaterally by a Spanish bank, the bank will either propose its standard transaction documents or provide bespoke documents that include certain fairly standard market provisions in addition to the specific provisions to adequately mitigate any risks involved in the transaction.

If the bank loan facility is granted on a syndicated basis, the banks will use transaction documents with standardized provisions in line with the terms one would expect in other European jurisdictions (subject to the specifics in the jurisdiction), such as following Loan Market Association standards or even adopting the available Spanish LMA forms.

In cases when a majority of the banks in the banking syndicate are located outside the country, it is not uncommon to write facility agreements (but not the security package) according to the laws of a foreign jurisdiction, most often those of England and Wales.

How do the structure and terms of bridge facilities deviate from those of a typical bank loan facility?

In our jurisdiction, committed acquisition financings and project financings often employ short-term bank credit facilities as bridges. Bank loans in Spain facilities have also been employed as a temporary means to permanent debt security financings in recent years. The bridge facilities can take the form of a revolving credit facility or a term loan with short-term and margin step-up features to incentivize the issuance of permanent debt security financings, which are consistent with the structures and terms of bridge financings implemented in other European jurisdictions.

What role do agents or trustees play in administering bank loan facilities with multiple investors?

Whenever there are numerous investors in a Spanish bank loan facility, the majority of the lenders will choose to have a third party (the “facility agent”) handle the day-to-day management and administration of the loan on their behalf. One of the syndicate members normally takes up this duty.

Some companies, however, have emerged in recent years as expert providers of agency-related functions like loan management, covenant monitoring, payment management, and back-office related functions, particularly in the context of large debt refinancing and restructuring processes where a great deal of additional agency-related workload is expected.

It should be noted that the facility agent will be paid an annual agency fee by the borrower, and the other lenders will be liable to reimburse the facility agent on a pro rata basis for any expenses or losses incurred by the facility agent in the course of fulfilling its duties.

Spanish banks prefer to be direct beneficiaries of the security package (and undisputed secured creditors), even when there are multiple beneficiaries of the specific security, the enforcement of which will require the adoption of the relevant formal adoption of agreement to do so.

Collateral agents are permitted in our jurisdiction (as such, they would hold the security granted in their own name and on behalf of the other syndicate members). You should know that trusts are not recognized by Spanish civil law.

Describe the primary roles and typical fees of the financial institutions that arrange and syndicate bank loan facilities

The key functions and usual fees of financial organizations that arrange and syndicate bank credit facilities are:

• The charge should be paid to the arranger for facilitating the bank lending facilities (typically a percentage of the total commitments in respect of the bank loan facilities).
• A yearly agency fee (often established based on transaction size, number of obliges, countries, members of the syndicate, and estimated administrative burden) will be paid to the facility agent; and
• Each lender has the option of charging a commitment fee on any portion of the loan that has not yet been taken down (representing a percentage of the respective commitments).
• Prepayment fees, cancellation fees, and waiver fees are all examples of additional charges that might be negotiated on a case-by-case basis. The facilities agreement or a separate fee letter may be used to establish fees, and either can be treated as a financing instrument for the appropriate reasons.

Overview

Banco de Espaa, Spain’s national supervisor of banks under the Single Supervisory Mechanism of the Eurozone, is the country’s central monetary authority (SSM). Spain’s central bank, which was founded in 1782, is a participant in the European System of Central Banks. Credit, stock, and money markets, as well as derivatives markets, are all a part of Spain’s interconnected banking system.

The Spanish Central Bank is not required to provide permission to a foreign bank that already operates legally in another EU member state and wants to open a branch or rep office there. The terms and criteria for entering Spain’s banking system are the same for both domestic and international institutions.

Since Moody’s Investors Service anticipates a continuous decline in problem loans and steady profitability in 2017 and 2018, the Spanish banking sector has been assigned a stable outlook. The assessment from the rating agency shows how reliable Spain’s banking sector will be during the next 12-18 months. This list of the best banks in Spain is a great resource for anybody thinking about a future in the financial sector in Spain.

Check out our comprehensive list of banking options for additional info. As repayment freezes are removed and indirect consequences of the Ukraine conflict show up in credit portfolios, the deputy governor of the Bank of Spain said on Tuesday that Spanish banks must closely monitor risks and a possible surge in bad loans on state-backed funding issued in the region.

Deputy Governor Margarita Delgado stated, “There are still numerous uncertainties surrounding the economy, currently fanned by the Ukraine crisis, and so we must be cautious about the development of the loans, much more so now that the grace periods of the loans guaranteed by the ICO will begin to be withdrawn.” Small and medium-sized businesses, as well as sole proprietors, may get loans of up to 80% of their value via banks thanks to a program dubbed “ICO liquidity lines,” which the government authorized up to 140 billion euros ($155.39 billion) for in 2020.

On Tuesday, the government green-lighted a fresh round of soft loans worth 10 billion euros with a 12-month moratorium on principal payments.