Mortgages in Spain

There are a wide range of mortgage products available in Spain. Mortgages are sold directly by the banks or through mortgage brokers. It is very important to research the market, to ensure you find the best deal that suits your requirements. Many lenders issue mortgage offers in English which comply fully with the Spanish legal system.

FAQs:

Links:

What documents will the bank ask for?

The documents typically required by a bank are:

• Your DNI/NIE number. (You must apply for a NIE number before you can buy a property in Spain.)
• Your contract of employment
• Your last 3 payslips
• Your latest income tax return
• Your pre-agreement with the seller
• Proof that the property tax (IBI) on the house is paid up
• Details of other mortgages or loans that you may have
• All property deeds, both in Spain and overseas
• Certificate from work authorities (vida laboral), showing your past work history
• Records of your current assets (bank/mutual fund statements, etc.)
• Prenuptial agreements, if any. Note the importance of the applicable marital property regime when you buy a property in Spain.
• Non-residents: A certificate of nonresidency (form available from the bank)
• If self-employed: Local tax on economic activities (IAE)
• If self-employed: Records of your assets during the last two years
• If self-employed: VAT tax you paid for the last quarter and last year

What is the typical length of a Spanish mortgage?

In the past lenders used to offer between 10-20 years. Now you can find 25 year mortgages or longer, depending on the lender.

How much can I borrow?

The lenders will decide this after reviewing your personal and financial profile. In general Spanish mortgage lenders give 60%-70% of the value of the property to foreign buyers of Spanish property. However, you may be able to find lenders offering up to 80%.

What are the main types of mortgage in Spain?

The vast majority are variable-rate mortgages, though you can also find fixed-rate and interest-only mortgages. In a variable-rate mortgage, repayments vary according to the Euribor, the base rate set by the European Central Bank. A typical bank offer may be a variable interest rate of Euribor plus a percentage of less than 1%, if the interest rate is fixed it would be higher than the above amount. There may be origination fees and early cancellation fees.

Are there additional costs when obtaining a Spanish mortgage?

Yes. These can be summarised as follows:

Property Valuation Fee: Before granting a mortgage, a Spanish lender will require the property to be valued by one of their own appointed appraisers. The buyer is responsible for this fee.

Mortgage Opening Fee: Many lenders charge a fixed fee of around 1% for setting up the mortgage.

Mortgage Insurance: It is a legal requirement of Spanish mortgages that you obtain general house and contents insurance. Depending on your circumstances, you might also consider life and mortgage insurance.

Mortgage Early Cancellation Fee: Buyers should be aware of this as it varies between lenders.

Mortgage Notary Fee: If a Spanish house is to have a mortgage registered against it, this must be declared before a Notary. The Notary will charge for this.

Spanish Stamp Duty: (known as AJD) is a tax on mortgages which is paid to the government. It is calculated as a percentage of the mortgage.

Deed Arrangement Fee: The lender employs a gestoria to arrange for the deeds to be correctly registered at the Land Registry. The buyer is responsible for the gestoria's fee.

Land Registry Fee: Following completion, the buyer will incur the land registry fee for completing the Registration.

Use our expenses calculator to estimate the costs involved in your purchase, as well as when you will need to pay them.

The buyer should consider the above carefully when budgeting to purchase a property. The buyer should make sure they can get approved for a mortgage before putting a down payment on the property. Since 2007, banks are much more stringent as to who they will approve, especially to a foreigner without a regular payslip.