Yes, foreigners are able to get mortgages in Spain. However, there are a few things that you need to be aware of before applying for a mortgage.
For years now Spain has been a very popular destination for people looking to purchase a property, as the country offers great weather, stunning scenery and a relaxed lifestyle. And while it is possible for foreigners to get mortgages in Spain, the process can be more complicated than for Spanish nationals. In this blog post we will take a look at who can get Spanish mortgages, what the criteria are and how non-EU citizens and expats might be affected.
How much can a non-resident borrow?
For many people, the biggest obstacle to buying a property in Spain is coming up with the large deposit that is usually required. Spanish banks will typically lend up to 70% of the purchase price of a property, which means that buyers need to find 30% plus around 10% in purchase costs (taxes and fees) themselves. This can be a difficult amount to come up with, especially if you are buying an expensive property.
The good news is if you have a regular income and you spend less than 40% of your income managing debts, such as loans and other mortgages in your home country, you can show proof of that income then you have a high chance of qualifying
What documents are required when applying for a mortgage in Spain for non-residents?
In order to apply for a mortgage in Spain, buyers will need to provide a number of different documents. These include proof of income (such as payslips or tax returns), proof of identity (such as a passport) and proof of address (such as a utility bill).
It is also important to note that Spanish banks do not have access to your income and credit profile, which is why a non-resident applicant will be required to provide more supporting documentation than say a resident might.
Here is a basic list of documents that anybody applying will need to submit, but depending on your situation the bank may ask for further documents.
- Copies of your Passport / NIE (for all parties that will be on the mortgage)
- Your most recent tax declaration or P60 (2 years)
- Your last three payslips
- Details of other properties you own including any potential rental income
- Bank statements for the last 6 month
- A credit report (if available in your country)
How long does it take to get a mortgage in Spain?
The time it takes to get a mortgage in Spain can vary depending on a number of factors, such as the type of property you are buying and the lender you are using. However, it is generally advisable to allow at least two months for the entire process, from start to finish.
This is because there are a number of different steps that need to be completed before a mortgage can be approved. These include the assessment of your application, the valuation of the property and the completion of all the necessary paperwork.
Once all of these steps have been completed, you will then need to wait for the mortgage to be approved by the lender. This can take anything from a few days to a few weeks, depending on the lender you are using.
What income does a Spanish bank take into account?
For many people, the biggest obstacle to getting a mortgage in Spain is proving that they have a sufficient income. This is because Spanish banks will typically only lend money to those who can prove that they have a regular income from employment or self-employment.
Those who are retired or do not have a regular income may still be able to get a mortgage, but they will typically need to provide a larger deposit than those who do have a regular income and it is far harder to receive an offer without a regular income stream.
It is also important to note that Spanish banks will only take into account certain types of income when assessing mortgage applications. For example, they will not always take into consideration any income that is derived from investments, but in most cases, income from a rental property can be taken into consideration.
What mortgage interest rates can I expect from a Spanish mortgage?
The interest rates on Spanish mortgages can vary depending on a number of factors, such as the type of mortgage you are taking out and the lender you are using. However, in general, interest rates on Spanish mortgages are lower than those in other European countries.
This is because the Spanish government offers a number of incentives to encourage people to take out mortgages, such as the ‘Euribor’ rate, which is a discount on the interest rate that is available to those who take out a mortgage with a Spanish bank.
The Euribor rate is currently at an all-time low, meaning that now is a great time to take out a mortgage in Spain. However, it is important to remember that interest rates can change at any time, so it is always advisable to speak to a mortgage advisor before taking out a mortgage.
Assuming your income and debt profile is good, then a non-Spanish resident can expect a variable interest loan of around 2% above Euribor and a fixed rate of around 3.5%, generally speaking, the rates on offer are better than you might receive in your home country despite the fact that you are not a resident in Spain.
What is the minimum income required to qualify for a non-resident mortgage?
In order to qualify for a non-resident mortgage in Spain, you will typically need to earn a minimum annual income of around €30,000. This means that if you are self-employed, you will need to provide proof of your earnings for the past year.
It is also important to note that Spanish banks will often require you to have a good credit history in order to qualify for a mortgage. If you do not have a good credit history, you may still be able to get a mortgage, but you will likely need to provide a larger deposit than those with a good credit history.
What is the maximum age to qualify for a non-resident Spanish mortgage?
There is no maximum age to qualify for a non-resident Spanish mortgage. However, it is important to note that most banks will only offer mortgages to those aged between 18 and 65. This means that if you are over the age of 65, you may still be able to get a mortgage.
What are the types of property a Spanish bank would be willing to offer a mortgage?
Spanish banks are typically willing to offer mortgages on a variety of different types of property, including apartments, villas, townhouses and even rural properties. However, it is important to note that each bank has its own rules and regulations regarding the type of property they are willing to lend against.
Rural properties, plots of land and commercial properties are typically harder to qualify for and much will depend on the applicant’s financial situation and the specific property and if it has any legal issues.
In summary
Yes, foreigners over the age of 18 can qualify for a mortgage in Spain, however much depends on your financial situation and the specific rules of the bank you are applying with. Interest rates on Spanish mortgages are lower than in many other European countries, making it an attractive option for those looking to purchase property in Spain.
However, it is important to seek professional advice before doing so, as the rules surrounding mortgages can be complex.
