Spanish mortgages explained

Non-residents can borrow to buy property in Spain, but the terms differ from those offered to residents. Knowing them before you make an offer avoids surprises.

How much can you borrow?

Spanish banks typically lend non-residents up to 70% of the property value, so you need a deposit of at least 30% plus money for taxes and fees. One lender can offer up to 75%. Terms normally run up to 20 years, subject to each lender's age limits.

How do banks assess you?

Each bank looks at the whole application: your income, existing debts, age and the property. Affordability is based on net income, and the currency you earn in can affect which lenders will consider you. Banks also treat rental income differently, so for buy-to-let owners the same application can get different answers from different lenders.

Why get approval first?

A financial approval before you make an offer, shows what you can really borrow, and shows sellers you are serious. It means you can make an offer quickly and with confidence, and it helps you budget with a clear view of your maximum offer, and the monthly costs to consider. Financial approvals are normally valid for 3 months.

How do you apply for a mortgage in Spain?

You can apply direct to the banks or use a broker. Spanish banks rarely have set rates and adapt their offer to each client, so it can help to use a long-established broker who specialises in non-resident lending. A good broker also overcomes language barriers and keeps the approval process efficient and stress-free.

Two kinds of broker in Spain

An independent broker can approach several banks and submit your application on your behalf. An introducer can only pass you to one bank, which then deals with you directly. Both are called brokers, so ask which one you are dealing with. An independent broker is registered with the Bank of Spain, must follow the Spanish mortgage law introduced in 2019, and will hold professional indemnity insurance for your protection.

What is a financial approval?

A financial approval means your fully documented application has been reviewed by the bank's risk team and underwritten. It is stronger than the approval in principle (AIP) you may be used to, where documents have not yet been submitted. It sets out the maximum loan amount and loan-to-value the bank will offer, along with any other terms and conditions. Spanish banks that offer linked products must tell you the rate with those products and without them, so you can decide what works best for you.

What happens after the financial approval?

Once you choose a property, the bank values it, and your final offer will be a percentage of the valuation or the purchase price, whichever is lower. The bank then provides a FEIN document, which is the binding offer. The FEIN sets out the final terms, along with the TAE, the annual equivalent rate, which shows the overall cost of the loan including fees. There is an obligatory 10-day cooling-off period before you can move to completion. The mortgage offer lasts 30 days before a new one must be generated.

Information provided by IMS Mortgages Spain

IMS Mortgages Spain has arranged mortgages for non-residents since 2002 and works with a wide range of Spanish banks. All applications are placed under Bank of Spain registration number D134. IMS has no upfront advice fee and will arrange a fully underwritten financial approval for you, at no cost and with no obligation.

For more detail, see Spanish mortgages for non-residents