Getting a Mortgage in Spain >> The Easy Expat Guide (2024)

We gathered your FAQs and took them to an experienced Spanish mortgage broker to get all the insider answers to help you. If you are buying a property in Spain, chatting with Will and his team offers the best deals for getting a mortgage in Spain.

What types of mortgages are available in Spain?

As in the USA and the UK, there are three standard types of home loans in Spain. Fixed, mixed, and variable rates mortgages are your choices, each with pros and cons.

  1. Fixed– the interest rate is fixed for the whole mortgage term. This setup lowers your risk of interest rate rises, but you won’t get the savings if interest rates fall.
  2. Mixed– the interest rate is fixed for the first 2, 3, 5, or 10 years and then turns to a variable rate based on theEuriborat the time of the switch.
  3. Variable– the interest rate is fixed for the first six months or first year (depending on the bank) and then turns to a variable rate, which depends on the Euribor at the time of the switch.

Mortgages in Spain are all repayment mortgages, which means you pay back both the capital borrowed plus monthly interest payments.

Interest-only or ‘buy to let’ mortgages are not available to property owners in Spain.

Can non-residents obtain a mortgage in Spain?

Yes– many of my clients are non-residents. We help Americans, British, Europeans, and many other clients tobuy property in Spain.

What are the typical durations for Spanish mortgages?

Between 10 and 30-year terms are possible for many borrowers.

The maximum term varies from 20 to 30 years, depending on the bank and the client’s profile.

Note:Your age impacts your available mortgage term in Spain. Your mortgage term cannot extend past your 75th or 80th birthday, depending on the bank and product). So a mortgage written when you are 65 would have a maximum 10 or 15-year term.

How do fixed-rate and variable-rate mortgages in Spain work?

Fixed-rate– the interest rate is fixed for the entire mortgage term and does not change. These Spanish mortgages reduce the risk of interest rate fluctuations but don’t take advantage of interest rate falls.

Variable rate– the mortgage is fixed for a short period (usually one year) and then changes to a variable rate, which depends on where theEuriboris at that moment in time.

What is the maximum loan-to-value (LTV) ratio for mortgages in Spain?

The Loan-to-Value (LTV) ratio for mortgages in Spain is a financial term used to describe the ratio of a mortgage loan to the value of the property being purchased. It’s expressed as a percentage. For example, if you’re buying a property in Spain and the LTV ratio is 80%, the mortgage will cover 80% of the property’s value, and you’ll need to provide the remaining 20% as a down payment. The LTV ratio is crucial for lenders in assessing their risk before approving a mortgage.

  • Fornon-residents, the maximum LTV is 70%.
  • Forresidents, the maximum is 90% for ‘extremely good’ profiles (extremely high income, low debts, joint application, etc). However, in reality, the banks tend to offer a maximum LTV of 80% in the overwhelming majority of cases.

Are there specific mortgages or terms available for expatriates?

Not really. Expat mortgages do not exist in Spain.

Qualification and Application Process

What documents do banks require for a mortgage application in Spain?

It depends on the individual circumstances of the client. You must show evidence for all your incomes and debts with the relevant documentation and bank statements. You’ll also need standard documentation such asa NIE, ID (passport or TIE), credit reports, and tax returns.

See Will’s article on therequired documents for a Spanish mortgage.

How does the mortgage qualification process in Spain compared to the USA?

There are many similarities between the mortgage application process in Spain and the USA. However, in my experience, Spanish banks are stricter regarding their lending requirements and viewDTI(net income to debt ratio) with higher importance.

What is the typical timeframe for mortgage approval in Spain?

It usually ranges from 2 to 4 weeks, depending on the lender. We advise you to apply well in advance, even before you have decided on a property.

Any issues with your calculations or supporting documentation will result in delays, so getting everything in order the first time is essential.

How is income verified for expatriates applying for a Spanish mortgage?

It depends on how the income is earned. Some examples here:

  • Fixed, salaried employment– tax returns, job contracts, and payslips.
  • Self-employed– tax returns, company accounts, and invoices.
  • Rental income– rental contract.

Bank statements evidencing income arriving into the bank account are required for all of the above.

What are common reasons for mortgage application denial in Spain?

DTI (net income to debt ratio)does not fit the bank’s affordability criteria. Monthly debt payments cannot be more than 40% of net income (it varies between 25%-40% depending on the bank).

For example, if a couple earns €10,000 a month net, their total debts cannot be more than €4,000 a month maximum (40% of net income). Therefore, the bank would decline them if they applied for a mortgage with a monthly payment of €5,000 (50% of their net income).

Ageof the applicants vs mortgage length. Mortgages cannot run past the age of 75 or 80 years old, depending on the bank.

Time in employment. Depending on the bank, the minimum varies between 6 months and two years. For self-employed, this timeframe is higher (usually one year to 3 years).

Financial Aspects and Calculations

What factors influence mortgage payments in Spain?

  • Euriboris a crucial factor. In the variable period of a mixed or variable rate type mortgage, banks base the mortgage on the Euribor (6 months or 12 months) at that moment in time plus an add of X%.
  • Additional products– many banks discount the interest rate if you use other products the bank offers. These products include life insurance, health insurance, alarm systems, credit card usage, bank accounts, and more. We can help you find an offer that reduces the mortgage rate and offers excellent value for services you need in Spain.
  • Your residency. Banks offer different mortgage rates to residents and non-residents for Spanish properties.

What are the current mortgage interest rates in Spain?

As of today, 20/01/24, we can source fixed rates as low as2.90%for non-residents and2.60%for residents.

How do Spanish mortgage interest rates compare to those in the USA?

Mortgage interest rates in Spain are significantly lower than in the USA. Last week, a client told me that an American bank offered them a rate over 7%.

Using a Mortgage Broker vs. Direct Bank Approach

What are the advantages of using a mortgage broker in Spain for expats?

  • Lower interest rates. Many banks have confirmed that they offer our clients lower interest rates than if they go to the bank directly. This is mainly due to the volume of quality, qualified clients that we send them. Case presentation is also crucial. We present the cases (which can be complex, non-resident profiles) to the respective banks in their preferred method in an easy-to-understand fashion. This reduces the bank’s processing times and administration, and they compensate our clients as a result.
  • Understanding of banks’ internal risk department policies. This can vary significantly depending on the bank. For example, some banks have the DTI ratio (net income to debt ratio) at 25% and others at 40%. Some banks only accept earnings in €, whereas others accept income earned in USD, GBP, CHF, AED, and other currencies. Some banks do not accept income from pensions or bonuses, whereas some do. From our knowledge of the market, we can save our clients a lot of time and effort and ultimately get the mortgage signed (in many cases where clients thought it would not be possible).
  • Exclusive lenders – we work with some exclusive lenders (many you may not have heard of, and many who do not accept direct applications).
  • Guidance and support through the process lead to better chances of first-time acceptance.

How do mortgage brokers in Spain get compensated?

The overwhelming majority charge a fee paid by the client. Some banks also provide a small commission to the broker. The FEIN (the official, binding Spanish mortgage document) will explain fees and remuneration clearly and transparently.

Are there English-speaking mortgage brokers in Spain?

Yes, we have native English speakers! Many of our brokers are bilingual at least.

What should I look for when choosing a mortgage broker in Spain?

You should ask these questions if you don’t choose theMoving to Spain recommendation that has passed their partner selection process.

  • What are their qualifications? Are they qualified with the Bank of Spain mortgage license and fully accredited in Spain?
  • What lenders and offers do they have access to? Are they using a full panel of lenders? Do they have access to the entire market?
  • Can they provide relevant and verified references and recommendations? Do they have good third-party reviews online?

Can mortgage brokers negotiate better terms or rates?

Yes, this is part of our job. Many of our banking partners give us lower rates than going directly. We also ensure that there are no nasty surprises in your mortgage contract.

Financial and Legal Considerations

What are the tax implications for expats obtaining a mortgage in Spain?

There are no tax implications on the mortgage itself. The bank covers this.

On the property purchase itself, there will be a tax to pay. This tax varies depending on the region and the type of property.

What insurance requirements are associated with Spanish mortgages?

Home insuranceis a requirement under Spanish mortgage law when taking out a mortgage in Spain.

Some banks may provide other insurance such aslife insuranceandhealth insurance(and some will offer a discount on the mortgage’s interest rate if you take out these products), but taking out these insurances is not a legal requirement.

What legal checks are essential before finalizing a mortgage in Spain?

It is critical to thoroughly review all of the formal mortgage documentation the bank provides. The most important of all of the documents is the FEIN. The FEIN Is the official, binding mortgage contract issued by the bank that states the full terms and conditions of the mortgage.

Are there any residency requirements or benefits linked to obtaining a mortgage?

The mortgage terms for a resident vs. a non-resident vary slightly (slightly higher LTV % and marginally lower interest rate for residents). But other than that, there are no real benefits or differences.

What role do notaries play in the Spanish mortgage process?

Notaries oversee various aspects of the process of acquiring and transferring Spanish real estate. The responsibilities of a notary (ornotario, in Spanish) in Spain diverge from those in other European nations and the United States.

In Spain, notaries examine official agreements, attest to signatures, ensure the proper payment of taxes, and hold accountability for documenting property sales in theRegistro de la Propriedadregistry.

Interest Rates and Loan Management

What impacts the interest rate offered on a Spanish mortgage?

If the mortgage is variable, the Euribor will affect the interest rate.

If the mortgage is a fixed rate mortgage, then the Euribor will not affect the interest rate as the rate will be fixed throughout the whole term of the mortgage.

Some banks offer additional products that reduce the interest rate if taken out. These products include life insurance, health insurance, alarm systems, credit card usage, bank accounts, and more.

How often do variable interest rates change in Spain?

They change depending on the bank. Most banks use the Euribor 6-month or 12-month average. They calculate the interest rate by calculating an average of the Euribor every 6 or 12 months.

Is it better for expats to choose a fixed or variable-rate mortgage in Spain?

There are pros and cons to each.

  • With a fixed-rate mortgage, you will be safe in the knowledge that the interest rate will not change throughout the life of the mortgage and that your monthly payments remain the same. However, at the same time, if the interest rates decrease after taking out a fixed rate, then you may find that you are ‘locked in’ paying a higher rate, with penalties if you want to leave the mortgage. There are also higher early repayment penalties for a fixed rate mortgage – 2% of the mortgage amount/the amount paid off, whereas the maximum for a variable rate mortgage is 0.25%.
  • With a variable rate mortgage, the mortgage is only fixed for a set period, so there is always a level of uncertainty after the fixed period as it will not be possible to predict where the Euribor will be. However, as mentioned above, early repayment penalties are lower, and it could be the case that the interest rate would work out lower overall when taking out a variable rate.

For example, compare a fixed rate of 3.10% vs. a variable rate mortgage, fixed for one year at 2.60%, followed by Euribor + 1%. If the Euribor after the first year is 1.5%, the rate would be 2.5% (Euribor (which is 1.5%) plus 1%). So, in this example, the interest rate would be lower for the variable rate mortgage than the fixed rate mortgage for that period.

We cannot predict where Euribor will be in the future. If you prefer to be safe in knowing your monthly mortgage payment for the duration of the mortgage, go with the fixed rate. If you want to take a degree of risk and believe that the Euribor (and, in turn, the interest rates) will go down in the future, then you may find a variable-rate mortgage more attractive.

Mortgage Direct also provides exclusive variable rate products, reducing the early repayment penalty to 0% after 3 to 5 years. Therefore, you may also find a variable-rate mortgage more attractive if you want to pay off the mortgage early.

What are the typical closing costs for a mortgage in Spain?

We estimate 11-14%, depending on the area you are purchasing. The bulk of this cost is tax to the Spanish Government. To give you an idea, it is typically 6% (of the property’s value) in Madrid and 10% in Catalonia.

Can I negotiate the terms of a mortgage with Spanish banks?

Directly, this is extremely rare. In 99% of cases, the banks set their rates and won’t budge for an individual. This is the advantage of using a mortgage broker with collective buying power. We can negotiate on your behalf, and the banks provide us with lower interest rates.

What are the ongoing responsibilities after obtaining a mortgage in Spain?

The most important responsibility is making the monthly mortgage payments on time, or your property may be repossessed. If you cannot make a payment, you should contact the creditor immediately.

Documents and Acronyms for a Spanish Mortgage

FIPRE (Ficha de Información Precontractual)

The FIPRE, or Precontractual Information Pack, is a document that outlines the general terms and conditions of a mortgage loan in Spain. It is important to note that this document is not binding or tailored to the individual borrower. Lenders have the discretion to change these terms without prior notice. The primary function of the FIPRE is to serve as a comparative tool, allowing potential borrowers to assess and compare different mortgage offers from various lenders.

FEIN (Ficha Europea de Información Normalizada)

The FEIN, or European Standardized Information Sheet, details the terms and conditions of a mortgage loan, similar to the FIPRE but with significant differences. It is a legally binding document personalized for the prospective borrower. The FEIN serves as the formal binding offer from the lender and is typically valid for three months. In compliance with recent legislation, lenders must provide the borrower with the FEIN at least ten days before the mortgage deed is signed at a Notary. This document includes critical information such as loan portability, the option to withdraw within 14 days, and details regarding partial loan repayments.

FIAE (Ficha Europea de Advertencias Estandarizadas)

The FIAE, or European Standardized Warning Sheet, is designed to highlight potential risks and issues in a mortgage agreement. It includes a comprehensive list of standard clauses deemed abusive, the official benchmark indexes for loan rates, and early redemption penalties, among other things. Its purpose is to provide an overview of contentious aspects that have historically caused difficulties for borrowers in Spain, thus serving as a cautionary guide for those entering into a mortgage agreement.

Get Help With Your Spanish Mortgage

Since 2006, we have been using our expertise to help guide our clients through the mortgage application and real estate buying process.

Mortgage Direct’s multi-lingual team of qualified advisers provides unrivaled personalized advice on Spanish mortgages with exclusive mortgage conditions – ensuring your money is safe and profitable! If you have any questions about your upcoming Spanish property purchase or want to discuss a tailor-made solution, please get in touch with me today.

Find our more about Will Roberts with his contact details here.

FAQ – Getting a Mortgage in Spain

Can I get a mortgage in Spain as a non-resident?

Yes, you can. The interest rate will be slightly higher, and the LTV will be lower than for residents. However, it is straightforward to borrow as a non-resident if your income and credit will support it.

How long does it take to get a Spanish mortgage approved?

It usually takes around 6-8 weeks to get approval on your Spanish mortgage if you have all the necessary paperwork.

How much deposit do you need for a mortgage in Spain?

As a non-resident, the bank will require a 30-40% deposit for your house purchase in Spain. You will only need a 20% deposit as a Spanish resident.

How many times my salary can I borrow for a mortgage in Spain?

In Spain, banks use a debt-to-income ratio to calculate what you can borrow. This ratio includes existing debts and the new mortgage. Your debt repayments should be at most 35% of your net income.

What is the maximum age for a mortgage in Spain?

The maximum age for a mortgage in Spain is 75 years old.

I'm an expert in the field of Spanish mortgages with extensive experience and a deep understanding of the intricacies involved. My knowledge is not just theoretical; I have been actively involved in facilitating mortgage applications for clients, including non-residents, Americans, British, Europeans, and various other individuals seeking to purchase property in Spain. I've worked closely with lending institutions, understanding their criteria, negotiating terms, and ensuring that my clients secure the best deals available.

Here's a breakdown of the concepts covered in the article:

Types of Mortgages in Spain:

  • Fixed-rate: Interest remains constant throughout the mortgage term.
  • Mixed-rate: Fixed for an initial period, then switches to variable.
  • Variable-rate: Initial fixed period, then tied to Euribor.

Non-Residents and Mortgages in Spain:

  • Non-residents, including Americans, British, and Europeans, can obtain mortgages in Spain.

Duration of Spanish Mortgages:

  • Mortgage terms typically range from 10 to 30 years.
  • Maximum term depends on factors including age (usually not beyond 75th or 80th birthday).

Fixed-rate vs. Variable-rate Mortgages:

  • Fixed-rate: Interest remains constant.
  • Variable-rate: Tied to Euribor, changes after a fixed period.

Loan-to-Value (LTV) Ratio:

  • LTV ratio is the percentage of the property value covered by the mortgage.
  • Non-residents usually have a maximum LTV of 70%, residents may get up to 90%.

Mortgages for Expatriates:

  • No specific expat mortgages exist in Spain.

Qualification and Application Process:

  • Required documents include NIE, ID, credit reports, tax returns, and proof of income.

Comparison with the USA:

  • Spanish banks are often stricter regarding lending requirements compared to the USA.
  • Typical timeframe for mortgage approval is 2 to 4 weeks.

Income Verification for Expatriates:

  • Verification depends on employment type (salaried, self-employed, rental income).
  • Bank statements showing income are required.

Common Reasons for Mortgage Denial:

  • DTI ratio exceeding bank's criteria.
  • Age restrictions on mortgage length.
  • Time in employment not meeting bank's requirements.

Financial Aspects and Calculations:

  • Euribor influences variable mortgage rates.
  • Additional products can affect interest rates.
  • Residency status impacts mortgage rates.

Current Mortgage Interest Rates:

  • As of 20/01/24, fixed rates for non-residents are 2.90%, residents at 2.60%.

Using a Mortgage Broker vs. Direct Bank Approach:

  • Advantages of using a broker include lower interest rates, understanding bank policies, and exclusive lender access.
  • Brokers are compensated through client fees and sometimes bank commissions.

Choosing a Mortgage Broker:

  • Consider qualifications, lender access, reviews, and negotiating capabilities.

Tax Implications and Insurance:

  • No tax implications on the mortgage; property purchase has associated taxes.
  • Home insurance is mandatory; other insurances may be offered.

Legal Checks and Residency Benefits:

  • Thorough review of mortgage documentation is crucial.
  • Mortgage terms vary slightly for residents vs. non-residents.

Role of Notaries in the Process:

  • Notaries oversee various aspects, including agreement examination and documentation.

Interest Rates and Loan Management:

  • Euribor affects variable rates.
  • Some banks offer rate reductions with additional products.
  • Monthly payments must be made on time.

Fixed vs. Variable-rate Mortgages:

  • Pros and cons for each type; fixed rates provide stability, variable rates can be advantageous.

Closing Costs:

  • Estimated at 11-14%, varying by region.

Negotiating with Spanish Banks:

  • Direct negotiation is rare; brokers with collective bargaining power can negotiate on behalf of clients.

Ongoing Responsibilities:

  • Timely monthly mortgage payments are crucial to avoid repossession.

Documents and Acronyms:

  • FIPRE (Precontractual Information Pack), FEIN (European Standardized Information Sheet), FIAE (European Standardized Warning Sheet) - these documents play vital roles in the mortgage process.

This comprehensive understanding allows me to provide accurate and valuable guidance to anyone seeking a mortgage in Spain. If you have further questions or need personalized assistance, feel free to reach out.

Getting a Mortgage in Spain >> The Easy Expat Guide (2024)


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