Can I get a mortgage in Spain?
21 Apr
Yes, you can obtain a mortgage in Spain. However, there will be some differences with your home country?
No complicated constructions
The most commonly used mortgage in the simple mortgage with "fixed" interest rate. With this mortgage, you pay the same amount every month. This instalment is composed by one part interest and one part capital. There are no complicated constructions such as a tie-up with investment products, which you will find in other countries.
How much can I lend
The maximum amount you can lend as a foreigner (not residing in Spain) is 70% of the purchase price or the taxed value. The lowest of the two is used. You cannot include the costs associated with the purchase and the mortgage in the financing, these costs are around 15%. Given here as an example:
You buy a €250,000 property, the mortgage you can get is a maximum of €175,000. In addition, you pay the mortgage and purchase costs of 15%, which in this case is 37,500€. You may therefore conclude that to buy a 250,000€ property, you will need at least 112,500€ of own capital. (For a project to be built, you should have a large part of the own capital available in order to make the prepayments to the developer, an example of which you can read in the last paragraph).
Please note in the above example we are talking about the maximum amount you can lend in Spain. Of course, this also will depend on your personal situation and your monthly income. So buying a house without any cash is not possible in Spain.
Mortgage duration
In Spain, the maximum repayment term for a mortgage is 30 years. Your age also matters when applying for a mortgage because most Spanish banks have a general rule that your mortgage must be paid off when you reach the age of 75. If you are 45 when you buy a property, the maximum mortgage duration will be 30 years. If you are 50 years old then this duration will be reduced to 25 years.
What do I need to apply for a mortgage in Spain
Because Spanish banks (usually) do not have a direct connection with your country's financial institutions, they need a number of items to see if you are eligible to apply for a mortgage in Spain. The most important items are proof of your income, your age, and the (taxed) value of the property. As additional information, they will also ask your marital situation (whether you wish to take out a mortgage alone or with more than one).
You can use a maximum of 35% of your net monthly income for total mortgage repayments in Spain, regardless of the country where you have these mortgages. If you have a mortgage and/or loans in your home country whose monthly repayment exceeds 35% of your net monthly income then you will not be eligible to apply for a mortgage in Spain.
The interest rate in Spain
At most banks in Spain, the interest rate is connected to the Euribor interest rate, with a margin on top. As in many countries, this surcharge is negotiable in Spain and depends on other products purchased. Most banks grant a discount on the mortgage if insurance is taken out, such as home or household insurance or life insurance. Depositing a monthly lump sum or payments using a banks' credit card are sometimes considered as an option to get a lower mortgage rate. The size of the amount to be lent in relation to the taxed value also matters in determining the interest rate. There will be a difference if you want to lend 15% or 70% of the valuation value.
No withdrawals in partials
In Spain, the mortgage amount is never granted in instalments. You should take this into account when you intend to buy a new building project where you need to make payments in instalments. You need to have the necessary funds to make these upfront payments. The funds from the mortgage will only be provided to you at the moment of going to the notary. Here is an example ( keeping in mind the same value of the previous example).
You buy a €250,000 property that has yet to be built. The payments to make with the developer could be as follows: 10,000€ at reservation + 10% at sales contract and then another payment of 25% when the structural work is finished. This means you will need €97,500 in funds to make the upfront payments. At the notarial transfer, you will however receive 175,000€ from the mortgage, with which you can then pay the last remaining balance. The other part will then remain on your account.
Are you looking for a mortgage in Spain or would you like more information? Contact us and we will be pleased to give you more information about a mortgage in Spain. You can contact us at +34 672 247 386 or you can also send an email to info@livinatspain.com.
