Hi everyone,
I’ve been looking into mortgage loans recently while house hunting and have visited a few banks. A term that kept coming up was ‘Avalista’. The bank manager saw my confused expression and gave a brief explanation, but I was still a bit lost. After getting home, I did some thorough research and realized this is a very important concept with significant pitfalls. So, I’m sharing what I’ve learned for others on the same property-buying journey.
What is an Avalista?
Simply put, an Avalista is your loan guarantor. When you apply for a mortgage to buy a home, if the bank considers your repayment ability to carry a certain level of risk, they will ask you to provide a mortgage guarantor in Spain. This person guarantees your loan with all of their personal assets. If you fail to make your monthly payments, the bank will go after the guarantor to repay your debt.
Therefore, asking someone to be your guarantor or agreeing to be one for someone else is a matter of immense responsibility and risk. It is definitely not as simple as just signing a paper and going through the motions.
When Do Banks Typically Require a Guarantor?
Banks don’t require a guarantor from everyone. Their main goal is to manage risk. Based on my research and what the bank managers told me, they usually ask for one in the following situations:
| Applicant’s Situation | The Bank’s Concern |
|---|
| Younger age, unstable employment | Uncertain future income, risky repayment ability |
| Loan amount exceeds 80% of the property value | Low down payment, relatively higher default risk |
| Self-employed / Freelancer | Income fluctuates and is less stable |
| Applicant is older with a long loan term | May retire before the loan is fully paid off, affecting repayment |
So, if you fall into any of these categories, you should be prepared for the bank to ask for a mortgage guarantor when discussing your loan.
Who Can Be a Guarantor? What Are the Requirements?
Not just anyone can be a guarantor. The bank’s screening process for a guarantor is often even stricter than for the loan applicant. Typically, banks prefer the guarantor to be a close relative, such as a parent. Additionally, the guarantor must have excellent financial standing, for example:
- Having a stable, high-income job.
- Having little to no personal debt.
- Owning property outright (with the mortgage fully paid off).
- Possessing significant savings and assets.
The bank needs to be sure that even in the extreme case where you completely stop making payments, the guarantor has sufficient capacity to ‘take over’ the debt.
Being a guarantor is a heavy commitment. It means taking on the financial risk of a friend or family member’s debt. In Spain, it’s not uncommon for family relationships to break down or for guarantors to have their own properties auctioned off due to these arrangements. So, whether you are looking for a guarantor or have been asked to be one, you must think it through very carefully and consider all the terms and worst-case scenarios.
It’s truly a promise that puts your own financial future on the line.
I hope this information is helpful to everyone! Wishing you all the best in finding your dream home in Spain!
