How to get a mortgage in Spain – A guide for foreigners
Resident or Non-Resident
If you are looking to stay long term, or perhaps want a holiday home, then you may be in need of a mortgage in Spain (unless you’re one of the lucky cash buyers). A mortgage in Spanish is called a “Hipoteca” (you don’t pronounce the “H”).
Spain of course loves foreigners to invest in property. On our development, Capanes del Golf, we have investors from all over the world, including Norwegian, Dutch, Belgian, German, Russian and of course English.
Non-residents can get a mortgage for a home in Spain, however the products on offer often have more restrictions on them than those available for residents.
Generally mortgages on second homes are considered more risky and are therefore offered at higher rates. So, if you are looking to purchase a second home, you will need to have available 30-40% deposit to secure a mortgage.
For people intending to reside in Spain it is much better, you should only need a deposit of about 20%. No matter what your circumstances, everyone has to pay fees and taxes, which can amount to a further 12-15%.
What is the process of getting a mortgage in Spain?
Mortgage providers do vary on how they assess your creditworthiness. Most banks will check your current outgoings along with any existing loan repayments you have, in order to make sure that any new debt is still affordable. You will be required to complete a personal balance sheet to show your existing financial arrangements, and to provide documents to prove your income and outgoings.
Most mortgages in Spain are arranged on a tracker basis, following the European Central Bank lending rates.
Fixed rate mortgages are available but not as popular as central interest rates have traditionally been quite low in the Euro area.
As with any financial decision, it is important you get good financial advice, consider your mortgage options carefully and ensure you can afford payment even if interest rates rise.
Additional costs of arranging a mortgage in Spain include:
Mortgage deed duty – 1.8% of the loan
Bank fees – about 1% to 1.5% of the mortgage amount. Notary fees – up to 0.5% of the loan value.
Valuation/broker fee – if you use one
10% VAT if you buy a new build property
Or 5-10% sales tax of the value of a re-sale property of the value
Buying a property in Spain is not as hard as some like to make out, as long as you ensure you take good financial and legal advice before you enter into any agreements.
Capanes Luxury Living would be happy to provide you with reliable legal and financial contacts. Please do not hesitate to contact us.
How to get a Mortgage in Spain, Capanes Luxury Living