Foreigners looking to buy property in Spain often ask us if they can secure a mortgage. Whether moving to Spain, investing, or expanding your real estate portfolio, understanding the mortgage process is essential. At Emergent Investors Spain, we specialize in guiding non-resident foreign buyers through Spain’s real estate landscape, from property search to financing.
This guide will walk you through everything you need to know about obtaining a mortgage in Spain as a foreigner, including eligibility, loan conditions, and tips for getting the best financing options.
Can a Foreigner Get a Mortgage in Spain?
The simple answer is yes, foreigners can indeed get a mortgage in Spain. The main factors banks evaluate aren’t your nationality but your tax residence and income currency. Spanish banks prefer income in currencies like the Euro, Swiss Franc, British Pound, US Dollar, Canadian Dollar, or Japanese Yen. Residents of the European Union and the United States typically enjoy broader financing options due to currency stability.
If your income is in a non-preferred currency, financing is still possible, though the options might be more limited, and conditions less favorable. For instance, non-residents earning in Filipino pesos may face stricter terms than those earning in USD.
How Much Can You Borrow?
Generally, Spanish banks will lend up to 70% of the property’s appraised value. This value is determined by an appraiser certified by the Bank of Spain and may differ from the purchase price. In exceptional cases, it may be possible to negotiate up to 80-90%, though banks typically impose higher interest rates for loans above 70%.
Banks apply the “30% rule,” which caps your mortgage expenses at 30% of your net income (after debts and rent). For instance, if your net annual income is €70,000, you can likely secure a mortgage with an annual payment limit of €21,000. This calculation helps the bank determine a mortgage amount based on affordability.
Mortgage Terms and Conditions for Foreigners in Spain
Spanish mortgage terms vary widely, but generally, banks offer three types of mortgages:
- Variable-rate mortgages: Linked to EURIBOR (European Interbank Interest Rate) plus a risk premium.
- Fixed-rate mortgages: A single interest rate throughout the loan period, usually ranging between 3-4% depending on your risk profile.
- Mixed mortgages: Initially fixed, then changing to variable after a set period.
Example: If EURIBOR is 3.70%, a variable-rate mortgage might have a total interest rate of around 5%, whereas a fixed-rate mortgage would likely be between 3-4%.
Mortgages for non-residents typically have 20-25-year terms or last until the borrower reaches age 75. Therefore, a 60-year-old applicant may only be offered a 15-year mortgage term.
Choosing the Best Bank for Your Mortgage in Spain
The best bank for foreign mortgages depends on various factors, including income currency, property location, nationality, and whether the property is new or secondhand. Banks known for favorable foreigner mortgage terms include Banco Santander, BBVA, Caixabank, Banco Sabadell, Bankinter, Unicaja, Abanca, and UCI.
Timing is crucial. You can only finalize your mortgage once you have a signed deposit contract for a property, so it’s essential to complete the mortgage process within 60 days to avoid contract risks.
Why Use a Mortgage Broker?
If you’re applying for your first Spanish mortgage, having a mortgage broker can save time, stress, and potentially thousands of euros. Mortgage brokers who handle multiple mortgages each year maintain bank relationships that allow them to negotiate more favorable terms than individual applicants. They are typically well-versed in the latest financing trends and can expedite the process, often working remotely to complete paperwork so you don’t need to be in Spain.
Mortgage brokers charge between 1.50% and 2.50% of the mortgage value. They only charge if you accept an offer, so you’re not financially obligated if no suitable deal is found. Look for independent brokers or small firms, as they generally provide more personalized service.
Tips for a Smooth Mortgage Application
- Hire an Independent Architect: For property evaluation, hire an architect who works independently from real estate agents to ensure unbiased advice.
- Get an Accurate Appraisal: The loan amount will depend on the appraised value, so a reliable appraiser is vital.
- Specialize for Non-Residents: Mortgage requirements for non-residents differ from residents, so it’s essential to work with a broker experienced in foreigner-specific mortgages.
How We Can Help
At Emergent Investors Spain, we provide comprehensive services to non-resident foreign buyers, covering property searches, contracts, due diligence, mortgage sourcing, and even residency applications. Our network of banking contacts across Spain allows us to offer customized mortgage solutions, even if you’re not physically in Spain.
If you’d like more information about our services, feel free to request a free assessment call with us. We’ll discuss your needs and outline the next steps for financing your Spanish property.
