If you have just arrived to Spain and need to find a mortgage with a Spanish bank you have some work to do!
Spain Golden Visa for Foreign Property Investors
Spain actively encourages foreign investment in Spanish real estate. In 2013 Spain created the Golden Visa Program. If you have more than 500,000 euros to invest, you can obtain residency, to be renewed every 2 years. After 5 years you get residency and after 10 years citizenship for your whole family. You do not have to reside in Spain to qualify for this.
Not everyone, however, has €500,000 to invest and if you need a mortgage to finance your property in Spain, you probably don’t have 500,000€ stashed away for a down-payment.
Spanish Mortgages for Foreigners
If you are actually moving to Spain to live there as your main residence you should be able to acquire up to 80% of the purchase price. If you are buying a second home or a holiday home expect mortgage offers in Spain to be around 60% or in more rare cases 70%. Spanish banks offer variable rate (using the euribor), mixed rates and fixed rates. Variable rate mortgages in Spain are currently in the euribor+1-1.5% range. Fixed rates are at historic lows for Spanish banks, some as low as 2.5%. (2017)
To qualify for a Spanish mortgage loan you need to first acquire a NIE. This is an identification number for foreigners. You can go to any local police station in Spain to acquire it. If you are not yet in Spain you can acquire it through the local Spanish Embassy.
You also need the following to qualify for a mortgage in Spain as a foreigner:
- Proof of employment or income – Show tax declarations from the country where you have currently been earning and paying taxes.
- Records of your current assets – Show property deeds, bank statements, paper asset statements, and profit-loss statement if you own a business.
- A pre-agreement with the seller
- Proof that the property tax is paid to date
- Details of your current debts and mortgages
- Copies of all your existing property deeds (in Spain and elsewhere)
- Any prenuptial agreements (if applicable).
Spanish Banks offering Mortgages to Foreigners
Most major banks offer loans to foreigners who can provide all the proper paperwork and proof of income. These include:
Banks in Spain offer better rates for low risk profiles and also for buying other products with them. The standard products you normally have to purchase are life insurance to cover the loan if you pass away and house insurance as well as depositing your monthly salary or business income in the account. Banks also offer pension accounts and investment accounts as ways to bring your mortgage rate down.
Other Conditions Spanish Banks Consider for Offering Mortgage
- Age – Most banks lend up to 70 years old. In rare cases up to 80 and if a younger person co-signs the age limit can be stretched.
- Net Income – Your mortgage shouldn’t be more than 30-35% of your net monthly income.
- Property valuation – The ‘tasación’ is made by an agent to determine the value of the property. Some banks give 80% of the tasación no matter the sale price. Other banks will only give 80% of the tasación o sale price, whichever is lower. If you get a low sale price you can potentially get 100% financing if the tasación is significantly higher.
- First or second home – Second homes are harder to finance and you can only get up to 60% in most cases.
- Resident or non-resident – In similar conditions residents get better offers than non-residents.
Remember to shop around. The first bank you go to may tell you that everyone offers the same but its better if you check for yourself. Good luck!
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