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Mortgages in Spain


Getting a mortgage with a Spanish bank does have certain important advantages – low interest rates, favourable write-off conditions, easier to sort taxes out, no expensive bank commissions caused by international bank transactions, etc. A mortgage in Spain is granted as a percentage of valuation or purchase price, whichever is the lower of the two. Standard loan to values are up to 50-60% for non-residents and up to 65-70% for residents. Spanish mortgage terms range from 10 to 30 years, are dependent on age and a selected Spanish finance provider. It is possible to repay your loan early. The average interest rate on a mortgage in Spain in 2016 is about 3,5-4% depending on the bank and contract conditions. Lenders determine how much you can borrow and your interest rate by taking into account your financial situation and the value of the Spanish property. It takes one month to receive a loan. All conditions of rate changing are fixed in the loan agreement. As a rule, you should repay every month, sometimes every three months.

Documents required for mortgage: your international passport, your NIE (Numero de Identificacion de Extranjeros), a foreigner’s ID number, the valuation of the property and a reference from your employer. Mortgage lenders in Spain are making their decision based on the figures from your financial data. Often they simply want to see your bank statements as further proof that you have a regular income. You will be asked to provide 6-12 months of personal bank statements from your or another country. Also instead of account statements you may submit a recommendation from your bank manager. As a general rule, they will lend according to the earnings multiples whereby your loan repayments on all your worldwide borrowing do not exceed 30% of your net annual income.

If you have any deposits, it would be useful to provide the lender with information about them. In the case of having your own business you should bring the certificate of the registration of the company and other relevant documents, which demonstrate your ownership or co-ownership. It is also recommended to add any documents which can prove your financial solvency: certificate of ownership of any property in other countries, company shares, etc. Spain banks always guarantee data privacy protection. The lender will analyse your current income and credit history (so you should provide a recent credit report) in order to qualify you for a maximum loan amount. Remember that only incomes shown on personal tax returns are normally taken into account. Some documents have to be translated into Spanish by an official translator and legalised with the Hague Convention Apostille or by the Tax Office.

The process of obtaining a mortgage loan in Spain:

  1. Open a bank account in Spain
  2. Valuation of the property (require 5-10 days)
  3. Presentation of required documents to the bank
  4. Sending the documents to the central office to determine the mortgage loan amount
  5. Transfer of funds to your Spanish bank account including funds to cover any disbursements that arise (taxes, notary and registration fees, commissions, insurance). If you transferred money before sending the documents to the central office it would help you to receive a credit approval.
  6. Signing the deed of purchase and mortgage contract and registration of the property in your name at the Land registry.

An example of the cost calculation of a mortgage deal (for 30 years, for a secondary real estate):

Purchasing Price:                                                                                      €150.000

Bank Fees – 10% (bank arrangement fee, registration fee, taxes, etc.)           €15.000

Signing up utility subscriptions – electricity, garbage collection,

water supply, etc. (approximately)                                                              €200

Total price of the real estate with all the expenses and taxes                         €165.200

The initial payment                                                                                   €66.080

Mortgage loan amount                                                                              €99.120

Monthly payment                                                                                      €472.64

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