Question:
We have heard that mortgages here are cheaper than in the UK. Is that correct, and how do we go about applying for one?

Answer:
It is definitely correct that mortgages are cheaper in the “eurozone” of which Tenerife is part, than in the UK. The reason for that is simple, the UK government uses interest rates (and hence mortgage rates) to control inflation. It is independent of Europe in that respect, and has interest rates much higher than in the rest of Europe. Typically you can obtain a mortgage here of between 4.5% and 5.5% variable rate, which could be as little as two-thirds of the equivalent in the UK. (Rule of thumb; for every 100,000€ you borrow, your monthly repayment will be approx. 1050€ over 10 years and 580€ over 25 years). However a few things you need to know.

1. 
   The Spanish banks are under a huge amount of pressure from Banca España to ensure they do not give loans to people who cannot afford to pay them, so you must be earning nett (after tax and any other mortgage commitments you have elsewhere) about 2.5 to 3 times your monthly mortgage repayment.
2. Banks lend broadly speaking 60% to non-residents and 80% to non-residents (although many managers have discretion to go above that). However this is not a percentage of the price you pay, this is a percentage of the valuation. (Tip; if you need an amount near the limit of these percentages, ask the bank to get a valuation before you commit any money for deposits).
3. Valuations are not normally made here by Surveyors, they are made by valuers who inspect the property, measure it, and compare it to the details found in the Escritura (title deed). For this reason, if extra rooms have been added but are not shown in the title deed, they are not included in the valuation. They then compare this to prices for properties they believe are similar locally, multiply it by the official meterage, and come to a value.
4. You will have to pay an opening fee, normally 1%, so keep a note of that in your calculations (most mortgages will have a 1% closing fee also).
5. If you are non-resident, many banks are reluctant to provide mortgages over longer than 15 years.

So the word is by all means look at the savings in mortgages here in Tenerife, just don’t take it for granted and look at the options back home of equity release and other schemes which may suit you better.