Navigating the mortgage process in Spain can be complex, especially for non-residents. Below, we answer common questions to help you understand and manage your mortgage application effectively. Check out our mortgages in Spain FAQ and start your dream home journey!
What documentation do I need to borrow up to 80% of the purchase price?
To qualify as a fiscal resident and borrow up to 80% of the purchase price, you generally need to provide proof of Spanish income tax payments. Typically, banks require either six months’ payslips from a reputable employer or two annual Spanish tax statements (declaraciones de renta).
Are buy-to-let mortgages available in Spain?
Currently, Spain does not offer buy-to-let mortgages. While some banks may allow property purchases with the intention to rent, they do not factor in future rental income in their lending decisions.
Are interest-only mortgages offered in Spain?
Interest-only mortgages are rare in Spain. Generally, mortgages require you to repay both capital and interest from the start. For construction projects, banks might offer interest-only terms for the initial one or two years.
How can I calculate my debt-to-income ratio?
Lenders assess your borrowing capacity by allowing 30% to 40% of your net monthly income (after tax) to cover all debts, including the new Spanish mortgage. They consider existing loans, credit cards, alimony, rental payments, and private school fees in this calculation.
How do banks determine what I can afford?
Banks determine your affordability by calculating approximately one-third of your net monthly income. This amount must cover existing debts, rent, and the new Spanish mortgage. This method helps banks evaluate your debt-to-income ratio.
What is the typical timeline from mortgage assessment to completion?
The mortgage process typically takes 4 to 6 weeks. However, it may extend up to 8 weeks or longer, particularly if it overlaps with the holiday month of August or if your financial profile is complex.
Should I appoint a lawyer for my mortgage?
Yes, appointing a lawyer is highly advisable. A lawyer will conduct necessary property checks and protect your interests. Ensure your lawyer is fully qualified and registered with the Colegio de Abogados. If issues arise, you can file a complaint with the College of Lawyers.
What costs are involved in the mortgage and property purchase process?
Taxes vary by region in Spain. For instance, property tax (stamp duty) is 10% in Catalonia and Valencia but 6% in Madrid. Typically, budget around 12% to 15% of the property price, excluding Madrid, where the estimate is around 10%.
What documents are required for a mortgage application?
Initially, no documents might be required for a mortgage quote. However, for the formal application, you will need to provide proof of identity, income, taxes, assets, and debts. This usually includes a credit report from a reference agency.
What happens after the mortgage completion?
After completing the mortgage process, the new property deed (Escritura) is generally available within three months. Your lawyer will provide this document, registering your name(s) as the legal owner(s).
What interest rate can I expect?
Interest rates are typically variable, based on the annual Euribor plus a margin. For example, if the Euribor is 0.2% and the margin is 1.6%, your rate would be 1.8%. Many banks offer a fixed rate for the first 6 to 12 months before switching to a variable rate.
What is an NIE number?
An NIE (Número de Identificación de Extranjero) is an identification number for foreigners in Spain. You need this number for various official transactions, including property purchases. You can apply for the NIE at the national police (Policía Nacional), with assistance from lawyers if needed.
What is the maximum amount I can borrow?
Non-residents can borrow up to 70% of the property’s valuation or purchase price. Fiscal residents may borrow up to 80%. These are the maximum borrowing limits and are not guaranteed for every applicant.
Who chooses the valuation company?
The bank arranging the mortgage selects a valuation company from its approved panel. All valuation companies must be authorized by the Bank of Spain.
Why use a mortgage broker instead of local banks?
Using a mortgage broker often secures better rates and terms. Brokers have access to preferential terms and maintain relationships with banks, improving your chances of obtaining a favorable mortgage. Brokers also expedite the process and ensure the best conditions.
Is life cover required for a mortgage?
Life cover is not universally required. While some banks mandate it, others do not. Always verify specific bank requirements.
Will my mortgage be with a Spanish bank?
Not necessarily. We work with both Spanish and international banks that lend in Spain.
Can pensioners obtain a mortgage?
Yes, pensioners can obtain a mortgage if one-third of their net monthly pension income covers the mortgage payment and existing debts. Mortgages must be repaid by age 75, though some banks may extend to age 80 on a case-by-case basis.
Need more information?
We hope our mortgages in Spain FAQ have been helpful! If you have additional questions or need personalized assistance with your mortgage application, contact us today. Our experts are here to guide you through every step of the process.