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Spanish house Spanish Mortgages - Can I Get A Mortgage In Spain? Expat Tips

Whether you are looking to purchase a property in Spain as a holiday home or as your permanent residence, there is a good chance that you will need a Spanish mortgage.

Once you do decide to take the plunge, it's important that you get your mortgage in place as soon as possible and preferably, before you start your property hunt. If you wait until you find a property, you may well put yourself under unnecessary pressure and end up opting for an expensive or inflexible loan.

Considering that most mortgages will run for around 20 to 30 years, choosing the wrong mortgage can be very costly.

Below you will learn everything you need to know about getting a mortgage in Spain including:-

  • How Spanish mortgages work
  • Resident and non-resident mortgages
  • How much you can lend
  • The types of mortgages on offer
  • The current mortgage interest rates
  • Associated mortgage fees in Spain
  • The documentation you will need for your application
  • And lots more..

Let’s check it out!

Who can get a mortgage in Spain?

Both residents and non-residents are able to get a mortgage (Hipoteca) to finance a property purchase in Spain.

Recent statistics from Statista show that in 2019, 76.2% of residents in Spain owned their own property which is higher than the OECD average of 60%.

However, it’s not just Spaniards who want to get onto the housing ladder. Spain is still a big attraction to foreign investors.

In fact, according to the real estate website, Spanish Property Insight and data from the country’s Land Registry, 10.8% of all property transactions in 2021 were conducted by foreigners.

Despite Brexit and the UK no longer being a part of the EU, this hasn’t impacted Brits ability in purchasing Spanish property. The right to buy a property in Spain is extended to everyone and is not limited EU residents.

To apply for a mortgage in Spain as a foreign resident or non-resident, you will need to have an NIE number. If you have Spanish citizenship, you will need your NIF number.

What is the maximum loan to value?

The amount you can borrow will very much depend on your personal circumstances including whether you are legally resident in Spain. Other things to take into consideration will be the type of property you will be buying, your level of income and the lender you decide to go with.

As a rule of thumb, the maximum you can lend as a non-resident is around 60-70% of the property's value. If you live, work and pay taxes in Spain, the loan-to-value (LTV) ratio could be extended further to around 80%.

As an example, if you wanted to buy an apartment for 250,000 Euros, and your lender agreed to lend you 70% of its value, you would need to find a deposit of 30% which would equate to 75,000 Euros.

Can non-resident foreigners get a mortgage in Spain?

As highlighted above, most of the larger Spanish banks such as Banco Santander, BBVA, and CaixaBank offer mortgages to non-resident foreigners, however, you will not get the same kind of deals that are available to residents.

You may also pay a slightly higher interest rate and have fewer mortgage deals to choose from.

You are not limited to the major Spanish banks. Many of the savings banks (Caja de Ahorros), international banks and mortgage brokers in Spain can also be used to obtain a mortgage.

Are fixed and variable rate mortgages available?

Yes, most of the major banks will offer a range of both fixed and variable rate mortgages.

Are 100% mortgages available in Spain?

Yes, but these are not very common and will most likely only be approved under exceptional circumstances.

If a lender agrees to lend you 100% of the property value, there is a greater risk for them if you were to default on the loan. However, if you have paid a deposit of 30% upfront, the lender will see you as a safer prospect as you would have already built up significant equity in the property.

If you are not able to pay a deposit in advance, there is a greater risk that you won’t be able to afford to repay the loan long-term.

After the crash of 2008, banks were rightly extremely cautious and pulled their 100% mortgage products.

What are the standard repayment years for a Spanish mortgage?

The mortgage term will vary and once again depend on whether you are a Spanish resident or not.

Non-residents can expect repayment terms of around 20 years with residents being offered mortgages over a 25-30 year period.

How much will my mortgage repayments be?

This will vary on the amount you are lending, the interest rates, the repayment terms, the interest rates and whether you select a fixed or variable mortgage.

The BBVA have a very nice Spanish mortgage calculator that you can use which gives you an accurate breakdown of your monthly repayments as well as the legal fees.

Will Spanish banks and lenders do a credit check?

Yes, they will. Spanish lenders will run a credit risk report referred to as a CIRBE (La Central de Información de Riesgos del Banco de España). This is so they can determine whether you have any debts in Spain. Learn more about CIRBE.

If you are from another country such as the UK, they may also ask you for an Experian credit report so they have a better picture of your debts and your ability to pay a Spanish mortgage.

What are the current mortgage interest rates?

Interest rates for Spanish mortgages are linked to the European interbank offered rate, commonly referred to as the Euribor and include an added margin on top.

With interest rates at an all-time low, now is the perfect time to purchase a property in Spain.

According to the country’s INE (Instituto Nacional de Estadística), the average interest rate in May 2022 on a variable mortgage was just 2.05%. For the average fixed rate mortgage, this figure was slightly higher at 2.66%.

How much will I need for fees?

Once you have found your deposit which could be anywhere between 20% and 50% of the purchase price, you will need to make sure you have enough set aside for your legal and conveyancing fees.

These may include a valuation fee of between 300 and 1,000 Euros, VAT/IVA (new properties), land registry fees, property transfer tax (ITP - Impuestos Transmisiones Patrimoniales) and stamp duty - AJD (Actos Jurídicos Documentados).

Banks tend to charge a 1% setup fee and the Spanish government will further charge around 1% stamp duty (AJD - Actos Jurídicos Documentados). Note that the banks will now pay the AJD tax along with other costs due to new Spanish mortgage laws introduced in June 2019.

The property valuation and arrangement fees will still need to be paid by the borrower.

Mortgage brokers charge 1% (although some may be willing to work for less)

On average the total costs will amount to approximately 12-15% of the purchase price.

So, in our previous example, if purchasing a Spanish property for 250,000 Euros, you can expect to pay between 30,000 and 37,500 Euros in fees.

In total, you will need to save between 42% and 45% of the property purchase price.

You will also need to pay capital gains on the net profits if selling another property. Below you can see the current rates for 2022.

  • First €6,000: 19%
  • €6,000 - €50,000: 21%
  • €50,000 - €200,000: 23%
  • More than €200,000: 26%
  • Non-residents: 19%

Annual Property Taxes

It is important to note that you will also have a yearly property tax to pay which is commonly referred to as IBI or ‘Impuesto Sobre Bienes Inmuebles’.

I.B.I is a municipal property tax in Spain that is paid each year to your local council. I.B.I is the equivalent of the council tax in the U.K. You will pay between 0.5% and 1.2% of the Valor Catastral value.

I.B.I tax is calculated as a percentage (which is set by each Ayuntamiento, or town hall every year) of the Valor Catastral value of the property. This amount is registered at the land registry and can be around 70% lower than the property's true market value.

What documentation will I need to apply?

This will vary slightly on whether you are employed, self-employed or a business owner.

To initiate a mortgage procedure, the following documents will be initially required:

  • The last 3 months of pay slips or an equivalent source of verifiable income if employed.
  • The last 3-6 months of bank statements recording such income.
  • The most recent P60/tax return
  • A valid copy of the applicant’s passport
  • Bank reference
  • Employment contract (Employed)
  • Company accounts for previous 1-3 years (Self Employed or Business Owner)
  • Copy of a personal credit report

Are There Any Age Restrictions On Obtaining A Spanish Mortgage?

Age restrictions can vary between the different lenders and will range from 60 and 75 years of age. Most loans are limited to 20 years, but in some cases can be extended to 30 years depending on age, affordability, and other criteria.

What is a Nota Simple?

A Nota Simple is a document provided by the Spanish Property Registry that includes a detailed description of the property. It includes the current owner’s information, whether any debts exist, the property boundaries, and how the land is classified (commercial, farmland, or developable).

Should I Use a Mortgage Broker in Spain?

A Spanish mortgage broker will be innately familiar with the relevant laws and regulations, but always check to make certain they have the right qualifications. Also, a Spanish lawyer, or abogado, is also advised, as some of the mortgage broker’s practices or policies may seem unfamiliar to a UK resident.

For further information, you may also want to read our other article, Buying a Property in Spain.