Mortgages in Spain: what expats need to know when taking out a Spanish mortgage


If you are serious about buying a property in Spain, then as well as carefully searching for the right property, it is also highly important to do your research when it comes to getting a mortgage in Spain if you plan to ask for financing. Planning ahead and doing your research will allow you to find the mortgage in Spain that best suits your needs and also help you avoid overpaying. Let’s have a look at 5 things that foreigners need to know when taking out a mortgage in Spain.

    Non-residents vs. residents
    Types of mortgages in Spain
    What documents are needed to apply for a mortgage in Spain?
    Additional fees on Spanish mortgages
    How long does it take to get a mortgage in Spain?

Non-residents vs. residents

The first thing you need to establish if you are planning to buy property in Spain is whether you are going to do so as a resident or as a non-resident. This makes a big difference, and while it is possible to get a mortgage in Spain as a non-resident, the process is more difficult. While some Spanish banks do not lend money to people living abroad, whether Spaniards or expats who are not registered as residents, many others will, but with added conditions. For this reason, it is important to know the ins and outs when taking out a mortgage in Spain as a non-resident to avoid unpleasant surprises.

Some conditions that are applied to non-resident mortgages include the following:

    You will have to provide a credit rating, as well as an employment contract, job record, salary history and details for your most recent tax return.
    Banks will not lend as much money to non-residents: while residents in Spain generally get financing between 80 and 100% in some cases, this figure for non-residents tends to be around only 60%.
    The maximum term will be no more than 20 years: this figure can reach up to 40 years for residents in Spain.
    As a non-resident, you will probably only have the option of a fixed rate mortgage as this is a lower risk option for banks (although this is not always the case).
    Higher interest rates for non-residents.
    All your documentation must be officially translated to Spanish.
    If you sell the property as a non-resident, a 3% tax will be applied.

For more information and guidance about mortgages for non-residents, check out idealista/hipotecas and get in touch with our mortgage experts.
Types of mortgages in Spain

In Spain there are 3 main types of mortgages: variable (adjusted with the Euribor), fixed, and mixed (a combination of both). Even though the financial products in themselves are the same for both residents and non-residents, it is worth noting that these mortgages may be subject to the conditions mentioned above and some differences may arise. Starting from here, you will then be able to find out how much interest you will have to pay, something which will depend on your profile as a buyer (i.e. how solvent you look in the eyes of the bank).
What documents are needed to apply for a mortgage in Spain?

The documents you need to submit when applying for a mortgage in Spain are both to show your identity and prove your income, assets, and debts. You will need:

    a copy of your passport
    a NIE number: this is the basic identification number you will need to carry out any legal procedure in Spain, including buying property. Find out how to get a NIE in Spain.
    proof of employment or income.
    your latest income tax return.
    a purchasing agreement from the seller.
    proof that demonstrates that all the property taxes are paid to date.
    complete information about other loans you may currently have.
    proof of your current assets and debts.
    a copy of your existing property deeds (in Spain or in any other country)

Additional fees on Spanish mortgages

When buying property and taking out a mortgage in Spain, it’s important to be aware of everything that you will have to pay from the word go. While banks in Spain generally don’t charge you either to get a mortgage offer or to take out a mortgage, there are other fees that need to be considered such as the property valuation, or perhaps even the help of a mortgage advisor or translator if you’re not familiar with how the system works or don’t speak much Spanish. Check out our guide which details all the costs and taxes associated with buying a home in Spain in 2020.
How long does it take to get a mortgage in Spain?

When applying for a mortgage for a property in Spain, the best advice is to start early and shop around. While the official mortgage process can only start after a sales agreement on your new home has been reached, it is both possible and advisable to start looking for a mortgage and contacting banks before this. The process from start to finish usually takes 6-8 weeks.

Market OverviewThe southern coast of Spain has long been a popular destination for tourists and foreign buyers, driving much of the nation’s housing-market recovery after years of falling prices in the wake of the global recession.
Before the coronavirus forced Spain to shut down in March, the market on the Costa Del Sol, just south of Málaga, was very stable, with constant high demand since 2012. Sales-wise, 2019 was “one of the best.”
Many important sales were achieved prior to the lockdown. Prices did not seem to be affected by the fears announced by some experts.
As of Aug. 18, Spain had reported 359,082 cases of Covid-19 (the most of any European nation) and 28,646 deaths (fewer than Italy, France and Britain).
Today, the market has nearly bounced back to pre-pandemic levels. Though a few deals were immediately cancelled when the lockdown began, most agencies saw strong interest, fielding more inquiries than usual from local, national and international buyers. The agencies were able to close deals also during the lockdown and some deals were generated via virtual viewings.
Still, total real estate transactions fell by about 20 percent from 2019, because of the “historic drop in air traffic and to the quarantine imposed to avoid the virus spread.”
When stay-at-home measures were eased in Spain and other countries, “pent-up demand” for properties on the Costa Del Sol rocketed, with property searches climbing 34 percent compared with the same period last year.
As soon as flights were authorized to land in Spain, sales started to happen, with many of the deals agreed prior to Covid-19 and completed in May and June. Prices and sales remain on par with 2019, with neither significant discounts on the deals nor big hits on the asking prices. With so much demand, some asking prices have increased.
Deals are also closing quickly. Many European clients that seem to be in a hurry to purchase houses here. People realize the comfort and efficiency of working remotely.
The Costal del Sol has 17 municipalities and more than 93 miles of coastline. Marbella has long been “the jewel of the crown,” including the neighbouring towns of Estepona and Benahavis in the “Golden Triangle,”.
The “Golden Mile,” between Marbella and Puerto Banus, is also coveted by deep-pocketed foreign buyers, with luxury prices ranging from $3.5 million to more than $70 million.
Sixty percent of buyers are purchasing holiday properties, often seeking modern new houses with traditional Andalusian flair. Prices for two-bedrooms near the beach range from 700,000 to 2.5 million euros ($828,000 to $2.95 million). Further inland, buyers can find properties for as little as 350,000 euros ($415,000).
In the port city of Málaga, home to about 570,000 people, the majority of buyers are full-time residents. Resales of older homes dominate and Mediterranean style is most coveted. New condominiums are being developed in the city and along the coast. In Málaga East, mansion prices top out at 4 million euros ($4.7 million), far lower than in Marbella.
Who Buys on the Costa del SolIn the province of Málaga, 28 percent of property transactions in 2019 were completed by foreign buyers. In the first quarter of 2020, it was about 33 percent.
Buyers typically come from Britain, Germany, Scandinavia, the Netherlands, Belgium, France and Finland and in general, span the globe, including the United States, Canada and the United Arab Emirates.
Buying BasicsThere are no restrictions on foreign buyers in Spain.
A Foreign Identity Number, obtained through the police department, is required for opening a bank account or to buy property.
A notary must oversee the process of signing contracts, transferring deeds and ensuring that taxes and fees are paid. An independent lawyer specializing in Spanish conveyance laws is highly recommended to do due diligence and check title.
Banks offer mortgages to foreign buyers for up to about 50 percent of the purchase price.

Source: The New York Times

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The planetary pandemic has affected tourism and has slowed down economies to an unprecedented level.

At My LHD however , we don’t rely solely on tourism and touristic activities . Wlad and Eladio are our local estate agents . They are able to dig out the best current deals on real estate operations , as well as rental , and rebuilding projects across Malaga and Marbella , up to Estepona .

At MY LHD we believe that in every crisis , hides a new opportunity, don’t be afraid to invest now. Because now is the moment , and when things will recover , and they will very soon, it may be too late.

We predict a very strong rebound , investors and private equities will be thirsty for deals. Lockdown has made us all hold back , but this pandemic even though challenging , will reveal new ways of doing business and new opportunities.

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