Can I get a mortgage in Spain as a foreigner?

Buying a property in Spain is an attractive option for many foreigners, whether it's for a holiday home, a second residence, or a permanent move to the sunny Iberian Peninsula. But how does it work when it comes to obtaining a mortgage as a foreigner?

Good news: it's possible! However, there are some important considerations to keep in mind.


Stricter conditions for foreigners

Spanish banks are willing to offer mortgages to foreign buyers, but the conditions are generally stricter than for Spanish residents. This is mainly due to the increased risk banks associate with lending to non-residents. It is important to be well-prepared and keep the following points in mind:

1. Down payment: One of the biggest differences is the required down payment. While Spanish residents often benefit from lower down payments, foreigners typically need to account for a minimum down payment of about 30% of the purchase price. This means that if you want to buy a property for €300,000 (excluding purchase costs), you will need a down payment of €90,000.
2. Income requirements: Banks will also impose stricter requirements on your income level and the stability of your financial situation. You must be able to prove your income with official documents, such as pay slips, tax returns, and bank statements. A stable and sufficient income is crucial to qualify for a mortgage.
3. Documentation: In addition to the usual documents like passports or ID cards and proof of income, banks may also require a Spanish NIE (Número de Identificación de Extranjero). This number is needed for almost all financial transactions in Spain, including applying for a mortgage.
4. Interest rates: Mortgage interest rates can vary and depend on several factors, such as the term of the loan, the amount of equity you can provide, and your creditworthiness. It is advisable to compare offers from different banks to find the best terms.
   
5. Legal advice: It is strongly recommended to seek legal advice before signing a mortgage agreement. A local lawyer can help you understand the fine print and ensure that all contracts are in your favor.

The application process

The application process for a mortgage in Spain usually begins with an initial consultation at the bank, where your financial situation is assessed. This is followed by submitting the required documentation and a credit assessment. If everything is in order, the bank will present a mortgage offer. The entire process can take up to three months, depending on how quickly you can provide the required documents and how busy the banks are.

Tips and advice

1. Bank versus mortgage broker: You can submit your mortgage application directly to a traditional bank or use a mortgage broker. While a mortgage broker charges a fee, they can help you find the best deal and handle much of the paperwork and communication with the bank. This can significantly simplify the process and relieve you of many tasks.
2. Increased purchase costs: In addition to the usual costs, you must also account for extra costs for the mortgage deed. This needs to be signed and registered, leading to additional notary and registration fees. It is important to include these costs in your budget.
   
3. Cancellation of loan after repayment: When you have fully repaid your loan, you must ensure that it is officially removed from the register. This is an administrative step that should not be overlooked to ensure that all legal matters are correctly finalized.
   
4. New build versus resale: Before the bank grants you a loan, the property must be appraised. For a resale property, this appraisal can be scheduled quickly, but for new builds, the appraisal can only take place when the property is ready to move into. Note: This means that the loan can only be granted after the appraisal, which can affect the timing of your purchase process. Make sure to account for this when planning your financing.
   
5. Timing: Inform the seller or agent of the property you are purchasing that you need a Spanish mortgage. Since the mortgage process can typically take a bit longer, it is important to ensure there is enough time between signing the purchase agreement and finalizing the notarial deed.

Conclusion

Although obtaining a mortgage in Spain as a foreigner requires more steps, it is certainly achievable with the right preparation and knowledge. By staying well-informed and seeking professional guidance, you can enjoy your dream home in beautiful Spain.