The Spanish real estate network of local experts

Your definitive guide to your Spanish Mortgage: How to apply? How to get the best rates? More than 5.400 readers – Oct 18

25 Jun
2018

Click on any flag to get an automatic translation from Google translate. Some news could have an original translation here: News     Nouvelles     Nieuws     Noticias     Nachrichten 

 

All the questions answered on how to apply for a mortgage in Spain

 

we will explain you in detail how Spanish banks work for providing mortgages to Foreigners who buy a property in Spain. Before going into the details of how it works, you have to ask yourself those questions:

 

1. How to get the best rate on your Spanish mortgage as a foreigner, as a non resident? 

What is the ideal customer for a bank?

 

  • Clients with a good professional profile
  • Good Credit Report
  • Affordability or debt to income under 35 %
  • Good resale value of the property
  • OECD countries

 

2. What are the different steps of the application process of your Spanish Mortgage?

 

1. What are the documents requested?

    • Your Passport / ID for all the applicants
    • Your NIE: “Número de identificación fiscal para extranjeros” or Foreign Resident’s Tax Number. How to get your NIE in Spain? What do you need to get it? Why do you need it?
    • Last 3 paychecks with the contract of employment
    • Proof of incomes/Contract
    • A view on your assets and debts
    • If it’s a new building: the “Deed for new building”
    • The private sale-purchase contract
    • If you have a mortgage at home, land registry information on the property and the mortgage
    • If pensioners: Official proof of annual income.

 

2. If the bank gets formal pre-approval from its risk department, then they send the mortgage offer.

3. When the bank gets the client confirmation accepting the offer then they open the account and send account details.

4. The client must send an appraisal provision.

5. The bank orders the valuation and gets the approval of the mortgage. Then they send an official mortgage offer.

6. The bank arranges completion with the client or legal representative in Spain.

 

 

3. How much can you borrow for your Spanish mortgage?

 

For your second residence and as a non-fiscal resident, a bank will finance no more than  70 % of the value of your property. We call this the “Loan to Value” (LTV: i.e.: the amount of mortgage you can get divided by the value of your property before tax), but this % is only for good enquiry.  This means that you would need to invest at least 45% of the property value with your own pocket.

 

How did we found this percentage? 45% = 100% + 15% costs for buying the property – 70% ofmortgage!

If you go for a LTV lower than 60%, most of the time, the bank will show more flexibility. In 2016, Mortgages issued in Spain had a LTV of 64% and only 15% had a LTV higher than 80%. Have a look at our table with up to date information on Returns, mortgages and short term and long term rates on the Spanish market.

If you read our article on bank properties for sale in Spain, you will be aware that there could be exceptions to this… if you buy a property from a bank… 😉

 

4. What rate should you take for your mortgage? Variable or Fixed?

 

There are a wide range of mortgages available

Most of the banks provide a wide range of mortgage:  variable, mixed and fixed rate. Due to the current rate environment, with short-term rates, Euribor, close to 0% and long-term rates very low, borrowers are taking the opportunity to get long-term rates at fixed prices. Before more than 90% of mortgages were issued as variable, nowadays this percentage is lower and 60% of the newly issued mortgages are issued with variable rates while 30% of newly issued mortgages are issued with fixed rates.

 

 

5. What are the current mortgages conditions in Spain?

 

As of May 2018

 

Please note that the mortgage cost is an average. In general, foreigners will get higher rates due to the fact that their assets and incomes are not in Spain but in their home country.

It is always interesting to check the financing conditions for banks:

You can always find all those data up to date on our table: “Returns and mortgage rates in Spain

Read more on that subject in our last paper: “The best mortgage rate in Spain in 2018

 

6. Check our ultimate mortgage calculator to price your own mortgage

Learn:

  • What are your monthly payments?
  • What is your mortgage schedule?
  • What is your maximum property budget?
  • How much mortgage can I afford in my Spanish home?
  • How much money do I need to buy my Spanish second home?
  • What is the minimum down payment you will need to have to buy your Spanish property?

 

 

 

7. What are your real estate investment returns in Spain?

 

As of May 2018

 

You can always find all those data up to date on our table: “Returns and mortgage rates in Spain” and read our last article on the subject: “What is your return on your real estate investment in Spain in 2018?

 

8. What is the activity on the Spanish mortgage market in 2017?

 

310.096 mortgages issued in 2017

During the year, we had more than 310.000 mortgages issued in Spain while 520.000 properties where sold. In 2016, the number of mortgages issued was 283.000, that is a 10% growth year over year.

 

9. Investing in Spain for yield? Buy to let? 

Our best tip: Don’t forget to take the mortgage when you buy, not after, if you want to reduce the taxes on your rental income thanks to your mortgages costs.

 

Are you looking for a competitive pricing from one of our local partners?

Click on the picture and fill the form.

 

Do you want to read more? 

Check our article with the last update on the best mortgage rates in Spain in 2018, with the official statistics from the INE, the Spanish statistic office.

Have a look at our reports:

Our reports on how to buy a property in Spain

 

If you want to find a bank in Spain, here is the official list from the bank of Spain with all the financial registered institutions.

Check our 8 legal steps to your Spanish property.

Infographic the 8 steps to your spanish property

 

Looking for a mortgage? A lawyer? A property hunter in Spain? Ask our network of local partners directly, we have a solution within our network!

 

 

 

 

 

Stéphane 

Senior analyst and strategist at HTBIS

Check the full HTBIS team here

FOLLOW US
SHARE with the colour icons at the bottom of your screen
print

Related Post

Privacy Preference Center

Translate