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Mortgages in Spain
Obtaining a Resident’s mortgage in Spain is not usually difficult, but the difference in terms and rates for Residents and Non-Residents can sometimes be considerable – it is wise to look into this and determine what your residential status will be from an early stage.
It is only in the last few years that the Banks in Spain have started to relax their lending policy and are now able to offer both a broader range mortgage products and bigger percentages of the purchase price.
As a rule of thumb you will need a 20% deposit to help you get a Spanish Resident’s mortgage but many lenders are now happy to lend you up to 95% of the value of the property and in some extreme cases (largely dependant on the valuation of the property that you have in mind) over 100%.
Another rule of thumb is that the larger the deposit you have ,the quicker and easier it will be for the Banks to agree to and process a mortgage for you. If you can raise the 20% deposit then this will make life easier for you and make the repayments easier.
One thing that is a little different with Spanish Resident Mortgages and something that you may not find in the UK is that the Banks here will very often lend based on the actual value of the property not what you are paying for it.
Basically if you are paying €100,000 but the property is valued by the Banks surveyor at €125,000 then you can borrow 80% of the €125,000 (Subject to your income or means to meet the mortgage repayments)
In order to get any Mortgage - whether a Residents Mortgage or Non Resident Spanish Mortgage - you need to supply proof of income and demonstrate an ability to repay the mortgage.
For any loan you will need to provide the Bank with a Copy of your Residence Card, Your NIE Number, Pay slips, Contract of Employment and if you are self employed, all your Bank Statements for the last 6 months.
For Non-Residents ...
As a non resident of Spain you are usually able to borrow up to 80% of the value of the property. However the bigger the percentage the more difficult it is to secure the finance. Most banks in Spain are happier lending 70% of the value.
If you have got a fairly large deposit and are able to put down 50% of the value then a non resident mortgage is reasonably easy to get.
As with Resident Mortgages , most Lenders will base on offer on the VALUE of the Property as opposed to what you are paying for it... explained in simple terms here... if the property you are buying is valued at €100,000 then you are able to borrow 70% of that value, i.e.: €70,000. This is regardless of what amount you will actually be paying.
Some banks are getting stricter on their lending criteria as non resident property purchases are slowing down. Many of the banks will now only lend 70% of the lowest figure. IE: the Valuation or purchase price. It’s best to check this detail with your lender.
Interest rates on nearly all Spanish Non Resident Mortgages are linked to the central base rate in Europe - the Euribor - and this will be the major factor in any changes to the monthly repayments that you will make.
Lastly, as in any Country there are Tax Implications when you own a property in Spain and having a Non Resident Mortgage may or may not help your tax position as a foreign property owner.
As with all major legal and financial transactions in Spain Tumbit strongly recommends that you seek professional advice from experienced and reputable sources.
Why not make your first steps towards finding out how best to finance your dream home in Spain today by contacting our Recommended Mortgage Lender for Free, no obligation advice?
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