The Spanish property market is running strong at the moment. Despite fears over Brexit that slowed the growth at the beginning of the year, foreign buyers are still dreaming of owning property in Spain, especially in the Comunidad Valenciana.
With such an influx of property purchases one key factor is always at the centre of any enquiry. How do I get a mortgage in Spain? Should I get a mortgage in Spain?
Here we have tried to address the most common questions that clients often have for our staff. Hopefully this will help to guide you to have all the information necessary when applying for a mortgage in Spain.
Can I get a Mortgage As A Non-Resident?
To start with, probably most importantly, can you even get a mortgage as a non-resident in Spain? We are often asked this question by foreign investors and the answer is yes. You can apply for a mortgage as a non-resident and the Spanish government actively encourage investment in the country.
The criteria for getting a mortgage as a non-resident is slightly different from that of a resident, you will need a higher deposit for the property and be able to borrow less against the value. In short though, you will be able to get a mortgage as a non-resident in Spain.
Who Is The Ideal Customer For The Bank?
- Clients with a good professional profile
- Good credit report
- Affordability or debt to income below 35%
- Good resale value of the property
- OECD countries
What Documents Do I Need For A Mortgage?
To apply for a mortgage you will need to provide the bank with a specific set of documents that are required to even begin the process. Many of these will need to be applied for separately before you even begin the purchase process.
Generally the required documents include:
- DNI / NIE
- Contract of employment
- Last 3 payslips (if employed)
- Last income tax return
- Pre-agreement with seller
- Proof that property tax (IBI) payments are up to date
- Details of previous or current mortgages and loans you have
- Property deeds in Spain and overseas
- Certificate of work (Vida Laboral) showing your work history
- Records of current assets
- Prenuptial agreements, if any
- Certificate of non-residency
- Local tax activities (if self-employed)
- VAT tax paid in last quarter and last year (if self-employed)
You may be provided with a more detailed list by your specific bank but this is a good overview to get you started.
How Much Can I Borrow?
You specific lender or bank will decide on the amount that you can borrow and at what rate after reviewing your financial profile. General Spanish mortgage lenders are giving up to 60% / 70% of the value of a property to foreign buyers. You may be able to find lenders willing to offer an 80% mortgage depending on your financial situation but these are less common.
What Types Of Mortgage Are Available?
The vast majority of mortgages available in Spain are variable mortgages, although interest only and fixed rate mortgages can also be found.
In a variable-rate mortgage, rates are based off the Euribor rates. This can be +X% that is set by the bank and it is subject to the mortgage rates across Europe. This may sound like a more risky solution but Euribor rates as of August 2019 have been at roughly -0.413%.
What Costs Are Involved In Mortgage?
When taking out a mortgage to buy a property as a non-resident you will be offered a maximum of 70% finance towards the purchase. This means that a further 45% of the cost will need to be covered by you personally (30% remainder of value + 15% fees and costs of buying property = 45%). The extra 15% is often forgotten about in the purchase process but the banks will take this into consideration when granting a mortgage.
The costs can include but are not exclusive to:
- Property Valuation Fee
- Mortgage Opening Fee
- Mortgage Insurance
- Mortgage Early Cancellation Fee
- Mortgage Notary Fee
- Spanish Stamp Duty
- Deed Arrangement Fee
- Land Registry Fee
- Agent Fees
These are some of the costs that may be incurred when purchasing a property in Spain.
What Are Typical Lengths Of Mortgages?
This can vary greatly depending on bank / lender and the age of an individual. The general length of mortgage being offered currently in Spain is of 20 to 30 years. Longer is very uncommon and shorter time frames would probably require strong proof of income and security.
We hope that this short FAQ about the mortgage process in Spain will help you navigate the application in a much more informed way. If you have any further questions or would like information about our mortgage partners then please contact [email protected]