Getting a Mortgage as a Non-Resident in Spain

Getting a Mortgage as a Non-Resident in Spain

Buying a property in Spain is a dream for many, and with its stunning coastline, warm climate, and vibrant culture, it’s easy to see why. However, for non-residents looking to purchase a property, understanding the mortgage process is key. While securing a mortgage in Spain as a non-resident can be a bit more complex than for residents, it is certainly possible with the right guidance. Here’s everything you need to know about getting a mortgage as a non-resident in Spain.

1. Who is Considered a Non-Resident in Spain?

A non-resident is anyone who does not live in Spain for more than 183 days in a calendar year. If you’re buying a property in Spain and live elsewhere, you are classified as a non-resident. Non-residents can still access Spanish mortgages to buy a property, but the terms and conditions may vary.

2. How Much Can You Borrow?

When applying for a mortgage as a non-resident, banks in Spain typically offer up to 70% of the property’s value or the purchase price, whichever is lower. This is lower than the 80-90% typically offered to residents.

The exact amount a bank will lend you depends on several factors, such as:

• Your income and financial stability: Banks will assess your ability to repay the loan by reviewing your income, employment status, and financial history.
• The value of the property: The bank will want to ensure that the property is worth the loan amount they are offering.
• Creditworthiness: Spanish banks will also check your credit rating in Spain (if available) or request your credit history from your home country.

3. What Documents Do You Need?

To apply for a mortgage in Spain, non-residents must submit several key documents, including:

• Passport or National ID: To verify your identity.
• Proof of address: A utility bill, bank statement, or other documents showing your current address.
• Proof of income: Recent payslips, bank statements, or tax returns to demonstrate your financial capacity.
• Employment contract: To show that you have stable employment.
• Tax returns: Recent tax returns from your home country are often required for banks to assess your income.
• Proof of savings or deposit: Non-residents need to show they have sufficient funds to cover the deposit and associated property purchase costs.

If you’re self-employed, you’ll need additional documentation, such as proof of business income and financial statements.

4. Interest Rates and Terms

Interest rates for non-resident mortgages in Spain are typically higher than those for residents, though they remain relatively competitive compared to other countries. The interest rates are often variable, meaning they can change over the life of the mortgage, or fixed, where the rate remains the same for a certain period.

The typical mortgage term in Spain ranges from 15 to 30 years, but it’s worth noting that for non-residents, the maximum term might be shorter, particularly if you’re above a certain age. Banks will usually not offer mortgages that extend beyond your 75th birthday, so younger buyers have more flexibility in terms of length.

5. Additional Costs

When buying a property in Spain, there are several additional costs to consider beyond the purchase price. These include:

• Notary fees: A notary must authenticate the property sale and mortgage agreement. The cost varies depending on the property value but typically ranges between €300 to €600.
• Registration fees: The property must be registered in the Spanish Land Registry, with fees usually around 1% of the property value.
• Property taxes: Including the Transfer Tax (ITP) or VAT (IVA) for new properties (usually 10%), plus stamp duty.
• Valuation fees: Banks require a property valuation before granting a mortgage, which typically costs between €300 to €500.
• Legal fees: It’s strongly recommended to have a legal representative in Spain to guide you through the process. Legal fees can range between €1,000 to €2,000, depending on the complexity of the transaction.

6. The Process of Applying for a Mortgage in Spain

1. Choose the property: Before applying for a mortgage, you should have a clear idea of the property you want to purchase.
2. Pre-approval: It’s a good idea to seek pre-approval from a bank before you start house-hunting, as it gives you an idea of what you can afford and shows sellers you are a serious buyer.
3. Find a mortgage provider: Non-residents have the option to apply for mortgages with Spanish banks or international lenders operating in Spain. It’s a good idea to compare rates and terms.
4. Submit the application: Once you’ve chosen a mortgage provider, submit the required documents and the property details.
5. Property valuation: The bank will conduct a property valuation to ensure it is worth the amount you want to borrow.
6. Mortgage offer: If the bank is satisfied with the application and property valuation, they will make you a formal mortgage offer. You can then go ahead with signing the mortgage and property purchase contracts.

7. Tips for Non-Resident Mortgage Applicants

• Work with a mortgage broker: Mortgage brokers can help navigate the process, especially if you are unfamiliar with the Spanish property market or language.
• Hire a legal representative: Having a lawyer who speaks Spanish and is familiar with local laws is crucial in ensuring that all legal documents are properly handled.
• Understand exchange rates: If you are applying for a mortgage in Spain but your income is in a different currency, fluctuations in exchange rates could affect your repayments.
• Consider your budget: As a non-resident, you may need a larger deposit and will face higher monthly repayments. Make sure you budget carefully for the long term.

Conclusion

Buying a property in Spain as a non-resident can seem daunting, but with the right preparation and guidance, it is certainly achievable. By understanding the mortgage process, gathering the necessary documentation, and working with experts, you can make the experience much smoother. At The Bay Properties, we can help guide you through every step of purchasing your dream home in Spain, including securing a mortgage. Contact us today to learn more!