How to Get a Mortgage as a Foreign Buyer in Spain

While the idea of securing a mortgage in a different country might seem overwhelming, the process is straightforward if you’re well-prepared. Here’s what you need to know about obtaining a mortgage in Spain as a foreign buyer.

Spanish banks are generally open to lending to foreign buyers. However, the conditions you’ll encounter often depend on whether you’re a resident or a non-resident, as well as your country of origin and the purpose of the property. Non-residents can typically borrow up to 70% of the property’s value or purchase price, whichever is lower. The loan term usually extends to 25 or 30 years, depending on your age, and the interest rates—whether fixed, variable, or mixed—may be slightly higher than those offered to residents.

To begin the process, it’s essential to gather the required documentation. Spanish banks will need proof of identity, typically a valid passport, and your Spanish NIE number, which serves as a tax identification number for property transactions. You’ll also need to provide evidence of income, such as pay slips, tax returns, or proof of business earnings if you’re self-employed. Recent bank statements, usually covering three to six months, will be required to demonstrate financial stability. A credit report from your country of residence is often requested to assess your creditworthiness, and you’ll need details about the property you intend to purchase, including any agreements or valuation reports.

Opening a Spanish bank account is a critical step, as it will be used to manage mortgage payments, taxes, and other property-related expenses. Many banks in Spain offer accounts tailored to non-residents, making this process straightforward.

When it comes to choosing a mortgage, it’s worth taking the time to compare options from various Spanish banks such as CaixaBank, Banco Sabadell, BBVA, and Santander. Each bank offers slightly different terms and conditions. Alternatively, working with a mortgage broker who specializes in assisting foreign buyers can simplify the process and potentially secure better terms.

Applying for pre-approval is a smart move. Pre-approval gives you a clear understanding of how much you can borrow and strengthens your position when negotiating with sellers. It also speeds up the final steps once you’ve found the perfect property.

Given the complexity of Spanish real estate laws, hiring a local lawyer is highly recommended. A good lawyer can ensure the property is free of debts or other legal issues, review contracts, and safeguard your interests during the mortgage process.

It’s also important to budget for additional costs associated with buying a property in Spain. Taxes play a significant role, with resale properties subject to a Property Transfer Tax of 10% and new builds incurring a VAT charge of 10%. Notary and land registry fees, which amount to around 1-2% of the purchase price, and mortgage-related expenses, such as origination fees and property valuation costs, should also be factored in. Legal fees, often around 1-2% of the property price, and insurance, which many banks require, complete the list of extra expenses.

Once the mortgage is approved, the final step involves signing the mortgage deed at the notary’s office, often alongside the property purchase agreement. You’ll also need to transfer funds into your Spanish bank account to cover the down payment, taxes, and additional costs.

By following these steps and ensuring that you’re well-informed, securing a mortgage as a foreign buyer in Spain can be a smooth and rewarding process. With the right preparation, you’ll soon be the proud owner of a home in one of the world’s most captivating cities.