How to Get a mortgage in Spain

Mortgages or home loans are the financial or banking product to which the average saver spends the most money. Buying a home with a mortgage is still the priority for many people and, through mortgage loans, it is possible to acquire our home.
Our mortgage experts explain everything you need to know to successfully compare mortgage loans: what is a mortgage, what types of mortgage exist, or how to get a 100% mortgage. 
If you are thinking of taking out a mortgage loan in 2020, here we offer you the best conditions, at the best interest rate on the market and with the lowest fees. If you are going to spend part of your income on a mortgage loan, take some time out of your day to understand what a mortgage is and how it works.

Types of mortgages in Spain

Spain offers the usual types of mortgages, with additional expat-focused Spanish mortgages offered by international banks and Spanish banks.Many Spanish mortgages have no restrictions on purchase price or nationality, though some products favor buyers from specific countries, or buying property in certain regions.

The biggest difference between residential and non-residential loans is the maximum loan-to-value (LTV) that banks will allow. Residents can generally borrow up to 80% of the property’s assessed value whereas non-residents are limited to 60–70% LTV, depending on the mortgage type. The good news is that it may be possible to borrow significantly more of the property’s value – up to 100% in some cases – when buying a bank’s repossessed property in Spain.

Some banks might only be willing to provide a mortgage to foreign buyers for their own real estate listings. In this case, your options for getting a mortgage may be closely tied to a particular property. In some cases, the mortgage you get may be based on the bank assessor’s valuation of the property rather than the price you’re paying for it. Thus, if an assessor valued your property at €125,000, you could traditionally borrow up to €87,500, even if your purchase price was only €100,000.

Getting a mortgage as a Non Resident in Spain.

It is a fact that more and more foreigners are buying homes in Spain. According to the data provided by the Property Registry in Spain, last year more than 61,000 houses were purchased by foreigners, which accounted for 13% of transactions. In fact, 7% of the mortgages issued in Spain for the purchase of a property were signed by foreign citizens. 
Mortgages for non-residents are loans granted by financial entities to foreign nationals or citizens who do not have residence in national territory, that is, who have either not stayed in national territory more than 183 days during the calendar year, or who do not have the main focus of their activities in Spain. In other words, this modality of mortgage loan is valid for those who pay their taxes outside the Spanish territory, regardless of their nationality.

Requirements for getting a mortgage in Spain.

The conditions that must be met by citizens who require a mortgage for non-residents are more demanding than those of citizens who are resident in Spain. Why? The reason is that in case of default and non-payment, there is a much greater difficulty in seizing assets from abroad and the only guarantee would be the property acquired in Spain.
For this reason, the percentage of financing granted in mortgages for non-residents is not as high as in other mortgage loans, which means that the client who wants to access a mortgage must have a greater amount of savings to pay the initial expenses. The percentage of financing for this type of mortgage is around 60%. As for the repayment period, this is usually around 20 years at most.
The interest rate applied to the capital loaned is higher in the case of mortgages for non-residents than for residents, partly because it is more difficult to comply with the purchase of products linked to the mortgage, such as the direct deposit of the salary. In addition, with a fixed-rate mortgage for non-residents, the customer will know exactly how much to pay back and will be able to rent the home knowing the return he will get.

Required Documents to get the mortgage.

The required documents when applying for a non-resident mortgage loan would be the following:

  • Photocopy of the NIE or passport.
  • Certificate indicating that you are not a resident in Spain.
  • Employment contract.
  • Last payslips obtained in your country of residence.
  • Bank statement for the last year in which the salary is paid.
  • Tax return.
  • Certificate of tax residence.
  • Contract of the house to be bought.
  • Last three receipts of outstanding debts that have been cancelled.

It will also be necessary to have all the necessary documentation translated into Spanish and a Spanish bank account, as well as to present the originals in person, although it is true that more and more financial institutions are accepting to receive the scanned documentation.

FAQs on Getting a Mortgage in Spain

How much can the bank lend you for your mortgage?

When choosing a home, the entity to which you ask for the loan will not normally lend you 100% of its value. That is to say, if your dream home is valued at 200,000 euros, the bank will grant you, as a maximum, a loan for an amount not exceeding 80% of the appraisal value of the property. Although, depending on the entity and your particular characteristics, you can get a higher percentage. From this maximum it is clear that it is essential to have savings available before buying a home. At least, to face the appraisal expenses, agency or those related to the Registry of the Property. This will mean around 30% of the price of the property, since you will have to have 20% of savings and approximately 10% to face the additional costs.

Who should pay the costs of setting up a mortgage?

Las entidades bancarias serán las encargadas de asumir los costes ligados a la firma del préstamo, como son los gastos de gestoría, el arancel notarial, registro y el impuesto de Actos Jurídicos Documentados (AJD). De este modo, el cliente sólo pagará la tasación del inmueble que vaya a adquirir, un requisito indispensable para la concesión de la hipoteca que oscila entre los 300 y los 600 euros, aunque podrá elegir a los tasadores con total libertad.

How much deposit do I need for a mortgage in Spain?

For a Spanish mortgage, you will generally need a minimum deposit of 30% of the property’s purchase price, with borrowing rates currently starting around 2% (lower for premium clients). “The maximum mortgage for non-residents is 70% of the purchase price or valuation, usually depending on which is lower.

How long does it take to get a Spanish mortgage?

To obtain the Spanish bank’s agreement is takes typically around 4 to 6 weeks.

Can foreigners get a mortgage in Spain?

Yes, foreigners can get a mortgage up to 70% of the Value of a property.

Do I need a Spanish bank account to buy a property in Spain?

The obvious answer is yes. You want to finance a property in Spain, you will have taxes, utilities … Get it right away. In order to open your bank account, you will need a NIE.

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