Spain offers great opportunities for foreigners to apply for a mortgage, in fact, it is one of the best countries to buy a property. The mortgage for foreigners has huge advantages, both in terms of added costs and flexibility of the transaction.
Today, and after the entry into force of the new mortgage law in June 2019, the buyer no longer has to face the initial charges, and instead the bank will bear the registration costs, the stamp duty, and the notary’s fees. The only costs for the buyer would be those related to the valuation that the bank carries out to assess the value of the property, which ranges between 300 and 500 euros, and the arrangement fee, which is between 1 and 1.5 %.
On the other hand, the interest rate in Spain is also quite low compared to other European countries, making it the ideal country to obtain financing. The only drawback is the amount financed, as banks are now stricter and only finance between 60 and 70 % of the property.
Another advantage for foreigners when applying for a mortgage is that they can pay in the currency of their own country, which makes the process much quicker and less complex.
Terms and conditions of mortgages for foreigners in Spain
When applying for a mortgage for foreigners there are a series of terms and conditions that the buyer should be aware of before taking on the investment in order to have a clearer idea of what the property will actually cost.
As mentioned above, generally banks will finance a maximum of 60 to 70 % of the value of the property for foreigners. If the foreigner can prove that he/she has been residing and paying taxes in Spain for at least 2 years, 80% of the financing can be obtained.
As far as interest rates are concerned, it will all depend on the solvency of the foreign buyer. In our country there are fixed-rate, variable-rate and mixed mortgages, which is a combination of both. Fixed-rate mortgages offer an interest rate of between 2 and 4 %, while variable-rate mortgages depend on Euribor plus a fixed differential. As for the repayment terms granted to non-resident foreigners, they usually range from 5 to 20 years at most.
Mortgages for foreigners require a series of formalities in which the following documents, translated into Spanish, must be provided:
- A copy of the buyer’s passport.
- Being in possession of the NIE, which is the unique and personal identification number granted to foreigners, and which is essential to carry out any type of economic or financial activity (e.g. buying a property). The NIE is also essential to be able to register as an owner once the property has been purchased. This number can be requested at the Spanish embassy in the foreign country, or at a police station.
- Marriage certificate if applicable.
- Proof of income obtained from work by means of the last three payslips and the employment contract. Self-employed persons must submit their last income tax returns.
- Proof of the tax return for the last tax year.
- The agreement reached with the seller regarding the purchase of the property.
- Proof that all property taxes have been paid.
- Certificate stating the buyer’s current assets and debts.
- Copy of the title deeds of any properties owned by the buyer, either in Spain or in another country.
How does the mortgage management service for non-residents work?
A non-resident foreigner must carry out the following steps to obtain a mortgage in Spain:
- Firstly, the buyer must gather and provide the required identification documents. These will help the bank determine the buyer’s income and expenses, as well as the taxes paid by the buyer.
- Once the bank has analysed all the information provided, it will make a mortgage pre-offer to the buyer, which is not necessarily the definitive one.
- Opening a bank account in Spain. This is not absolutely necessary, but it is highly recommended. This will speed up and simplify the buying process, as dealing with a foreign bank will entail delays and complications.
- At this point, the buyer will be able to compare the first bank’s pre-offer with those of other banks, in order to get the best possible conditions. The buyer will then have to choose the most favourable offer.
- Finally, the mortgage will be signed before a notary to finalise the process.
If you are determined to buy a new home, Sonneil can help you find the perfect house in unique locations close to the sea. And we also assist you in finding the mortgage that best suits your needs!