Can a non-resident apply for a mortgage in Spain?
With the good results of the vaccination campaign and the lifting of mobility restrictions, you are probably thinking about buying a house on the Mediterranean coast and wondering if a mortgage can help.
Knowing the investment you can make, the expense you are going to have, whether to buy it new or to fix it up, calculating the exact amount you are going to need, are the first doubts that will arise.
As you know, a mortgage is a good option for financing a large part of the purchase, but not all banks offer this service or when they do, their conditions are very hard to non-resident tax in Spain.
Foreign currency mortgage loans in Spain
You should also be aware that not all banks offer mortgages for non-residents as banks are obliged to allow consumers to take out a mortgage in a currency other than their own and to switch the mortgage to another currency at any time during the life of the loan.
This has meant that some banks do not accept applications from tax residents outside the EU, UK, US and some other countries.
Understanding mortgages is not simple.
At Fuster & Associates, we know well which banks offer this service and what the mortgage process is like for non-residents. We can also tell you which type of finance is more suitable for you and which banks can offer the best conditions.
As a guide, mortgages for non-residents in Spain offer between 60% and 70% financing of the property price to be paid over 20-25 years.
But there is no single mortgage, there are several types, the most widespread are:
Fixed interest rate mortgage (Just for European citizens)
It provides security because it keeps its interest rates invariable, that is to say, during the whole duration of the loan the instalment to be paid will be the same because it is independent of the fluctuations of indicators such as the Euribor.
However, they are usually more expensive because the interest rates are higher, since in this case it is the bank that assumes the risk of rising interest rates.
Example of a fixed-rate mortgage as of May 2021:
- Commitment fee: 1%
- Interest rate: 2.5%.
- Maximum financing 60-70% LTV (depending on economic clients situation)
- Maximum term: Up to clients are 75 years old.
- Early redemption and total cancelation: During the first 10 years of the validity loan 2%. Rest of the years: 1.5%
The variable mortgage (European and Non-European citizens)
It works in the opposite way to the fixed mortgage, as in this case it is the client who assumes the fluctuations of the Euribor. If this indicator is at low levels, the mortgage will be much cheaper.
Example of a variable interest mortgage as of May 2021
- Commitment fee: 1%
- Initial interest rate with semi-annual reviews: 2%.
- Rest of the years: Euribor+ 2
- Benchmark rate Official Euribor
- Last published benchmark rate -0,487%
- Maximum financing: 60-70% LTV (depending on economic clients situation)
- Maximum term: Up to clients are 75 years old.
- Early redemption and total cancelation: During the first 3 years of the validity loan 0.25%. Rest of the years: 0%
- Several linked products such as Life and Home Insurance, credit and debit cards.
Dealing with Spanish banks
Once you choose the mortgage for non-residents you should examine the conditions very carefully before signing.
Certain conditions can be abusive, whose application is illegal, such as some floor clauses that are not clearly informed to the user, since they fix a minimum interest rate.
Also, some concepts such as extra charges for additional products are important.
Our advice before applying for a mortgage is to make sure you know how much you can apply for, that you meet the bank’s requirements and that you have the necessary documentation ready.
Contact us and we will tell you:
–how much mortgage you can qualify for
-which banks will give you the best conditions
You can also see a quick guide on how to apply for a mortgage in Spain here
As independent advisors we know how important good advice on financing is for you to buy your home and we will help you to get a non-resident mortgage in Spain.
