If you’re not a resident in Spain, what are your mortgage options?

The Spanish property market is hotter now than at any other time in the last ten years, and we are regularly asked about mortgage deals currently available, especially for non-residents. Many non-residents believe the mortgage process to be difficult, but it's not impossible. Most Spanish banks are happy to lend money to people living abroad, whether Spaniards or non-nationals. But it is important to know the ins and outs when borrowing to avoid unpleasant surprises.

First of all, you are going to pay more

Non-residents and Spaniards living abroad will pay higher interest rates than they would if they were resident here. A fixed-rate mortgage, the usual option in this case, around 2.5% for 20 years, and a variable rate, the fixed part added to the Euribor index is between 1.1% and 1.25%. Buyers will have to take out life and home insurance
The reason non-residents pay higher interest rates is because they are buying a second home and will find it harder to meet some conditions that could reduce costs, such as having one’s salary paid into the bank. Fixed-rate mortgages are the most common option right now for non-resident buyers. Banks prefer to give fixed rates so that the amount the purchaser repays is steady. This is one way to offset uncertainty and reduce risk down the road. The usual maximum repayment period for non-residents will depend on the buyers age, but a mortgage up to the age of 75 is not unusual.

You’ll be lent less money

Even though as a rule, a mortgage should not be more than 80% of the value of the property, residents in Spain are sometimes able to borrow up to 100%. In the case of non-residents, the figure tends to fall to a maximum 70%. This is because in the event of non-repayment, the bank’s only guarantee is the property itself.

You’ll have to provide a credit rating

Aside from a tax return, salary payroll, and bank statements, non-residents are usually required to provide a credit rating from their country of origin or residency. The three main credit reporting agencies are Experian, Equifax and Transunion. The origin of all money the buyer puts in to the property has to be accounted for as part of efforts to combat money laundering.

You’ll have to translate all documentation

Not only will any paperwork from outside Spain have to be translated, some banks also require the Hague Apostille, an international authentication comparable to a notarization in domestic law. This can be sent by email to the bank for confirmation, but the contract must be signed by the interested party or by a legal proxy. That said, here on the coast, many of the staff members speak English, French, German, Flemish, and Russian, so banks will accept in-house translation by their own account handlers.
If you’re a non-resident foreigner, you will need a NIE (Foreigner Identification Number) which can be obtained, by appointment from a Spanish embassy or consulate office, or here in Spain.

The obstacles foreigners face

In our experience, we have noticed that banks prefer to work with non-residents from the United States, EU members and Scandinavia, though it’s still possible for banks to work with people from other countries but patience is required. The checks and requirements can seem exhaustive.

Contact us now if you have any questions relating to mortgages or of course property in Spain, we'd love to hear from you on 0034 966 112 773 or email info@ultimatehomes-spain.com

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