Spain is a dream destination for property buyers, offering an affordable and desirable blend of sun-soaked beaches, vibrant cities, and charming countryside retreats. With its warmer climate, relaxing lifestyle, and accessible property market, it’s no surprise that Spain consistently attracts buyers from around the world.
For non-residents looking to buy in Spain, a basic understanding of some Spanish mortgage law is an important part of the process. A process that, for non-resident buyers, can be slightly more complex requiring dealings with local regulators and lenders.
Whether you’re buying a holiday home or planning a permanent move, knowing the ins and outs of Spain’s mortgage regulations will set you up for success. Let’s take a look.
Is it difficult to get a mortgage in Spain?
Getting a mortgage in Spain can be straightforward if you meet the eligibility requirements and properly prepare for the process.
For non-residents, the process is often more challenging due to additional documentation and stricter loan-to-value (LTV) ratios, but it’s certainly possible, with many non-residents deciding to call Spain home every year.
Mortgage approval for non-residents
So what exactly do non-residents face when buying a home in Spain?
Stricter deposit requirements
Non-residents often need larger deposits when purchasing Spanish properties.
Resident buyers can borrow up to 80% of the property value from mortgage lenders while non-residents are typically limited to 60-70%, meaning a higher deposit is required for purchase.
Income verification
Lenders require proof of a stable income for new buyers. This may be in the form of bank statements, a letter from your employer, or other documentation.
A mortgage calculator can be a good tool to assess affordability yourself before proceeding with formal applications.
Checks for a good credit history
A clean credit record, both in Spain and your home country, is often crucial for the process.
If you’re unsure about your chances of approval, you can get your case analysed by someone familiar with the property market and the Spanish mortgage process.
Can you get a 30-year mortgage in Spain?
Yes, 30-year mortgages are available in Spain, but the loan term available will often depend on individual circumstances.
Lenders usually look for repayments to be complete by the time the borrower approaches 70 years old, or the time when they stop working.
In many cases, non-resident buyers will be capped at a 25-year loan duration.
With higher deposits required as standard for non-resident buyers, these slightly shorter terms become more affordable.
What are the mortgage laws in Spain?
Spain's mortgage laws saw significant updates in 2019 to comply with EU regulations. These reforms aimed to make the mortgage process more transparent and borrower-friendly.
What was the impact on buyers?
- Cost distribution
The law shifted some mortgage-related costs to the lender to make properties more accessible. - Pre-contractual transparency
Lenders are required to provide detailed, easy-to-understand information about mortgage terms, including interest rates, fees, and repayment schedules. For non-residents, it’s often beneficial to work with a mortgage broker to ensure a complete understanding of all documentation. - Mandatory notary meeting
Before signing a mortgage, borrowers must meet with a notary to ensure they fully understand the terms and conditions. This step helps to prevent disputes and ensures transparency for all parties. - Fixed-rate mortgages
Borrowers can choose fixed-rate options, offering stability and protection from market fluctuations. Non-resident buyers will often be limited to these fixed-rate products. - Early repayment flexibility
Borrowers can repay their mortgage early with reduced penalties, depending on whether the mortgage is fixed or variable rate. - Interest rate caps
For variable-rate mortgages, the law sets limits to prevent excessive interest rate increases.
Additional considerations when taking out a mortgage in Spain
With these protections in place, what else must buyers consider when buying a Spanish property?
Work with a mortgage broker
Navigating Spain’s mortgage system can be complicated, particularly for non-residents unfamiliar with the local market. A mortgage broker who specialises in Spanish mortgages can make all the difference.
They’ll guide you through the process, help you understand your eligibility, and connect you with lenders offering the most competitive mortgage products.
Understand all costs involved
Although Spain's new mortgage laws have shifted many fees to the lender, buyers should still be prepared for additional costs on top of their deposit.
These include:
- Valuation fees
- Taxes
- Notary and registry fees
Choose the right mortgage type
Spanish lenders offer several mortgage options for prospective buyers. Selecting the one that suits your financial situation is important.
- Fixed-rate mortgages - Offer stability with a consistent interest rate and predictable monthly payments.
- Variable-rate mortgages - Rates are tied to the European Central Bank’s Euribor index, meaning payments may fluctuate. These can be beneficial if interest rates are low but carry the risk of higher costs if rates rise.
Check eligibility and documentation
Non-residents face additional criteria for mortgage approval in Spain. You’ll need to provide documents such as:
- Proof of income and employment status.
- Tax returns and bank statements.
- A valid NIE (Foreigner’s Identification Number).
Having these documents ready will speed up the approval process when you find a property you like.
Review exchange rates and currency risks
If you’re purchasing a property in Spain using a different currency, fluctuating exchange rates can impact your payments.
This is something to consider when purchasing your property, especially if rates are particularly high (or low) at the time of purchase.
Think long-term
When buying a property it’s important to evaluate the long-term affordability of your mortgage. Calculators can help but try to think about how your circumstances might change during your loan period.
Factor in potential changes to interest rates, your financial circumstances, and the plans you have for how you’ll use your property.
Secure your dream property in Spain
Spain’s mortgage laws are designed to protect borrowers while keeping a fair lending landscape for mortgage providers.
Whilst it’s not essential to understand every detail, it’s important that non-resident buyers fully understand what will be involved in the process of buying a Spanish property.
Mortgage brokers are essential for non-residents and can often bridge the knowledge gap to ensure a seamless experience with the Spanish mortgage market.
Get your case analysed today and buy your dream home in Spain.