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Special advice for US residents

Spanish mortgages for American property buyers

The USA has a strong culture of using mortgage brokers and at Mortgage Direct we have a long history of assisting American property buyers. We offer the range of services that American clients expect and this, along with our understanding of USA tax documents and an ability to explain these in detail to Spanish lenders, gives us a great deal of success in this market. 

Victor Horcasitas, president of The American Society of Barcelona, has confirmed to us that over the last decade he has seen a steady increase in the number of American citizens buying in Spain, both as a percentage of buyers within the expat community and also in terms of the general number of people buying, year on year. Our records show similar trends for American buyers taking out mortgage finance in Spain.

How are American property buyers affected by the regulation of the Spanish mortgage market?

Under the recent Spanish mortgage legislation (LCCI 05/2019) mortgage borrowers now have rights if their earnings (or in some cases assets) are in any currency other than Euros. If that currency drops in value by more than 20% against the Euro, they now have a legal right to request that the mortgage converts from a Euro-denominated mortgage to one in the currency of their earnings or assets, subject to certain conditions. This is seen as a new and potentially high-risk issue by Spanish lenders.

One of the lenders we work with feels that the US Dollar (USD) is one of the more volatile currencies and, due to the new rights for borrowers, they’ve decided to stop lending to American clients whose incomes or assets are mainly in USD. They also believe that in general there is a higher risk of defaults for Americans compared to other nationalities.

Despite the USA having experienced some terrible mortgage defaults in recent history as a result of the subprime lending scandal between 2007 and 2010, we do not agree with this lender’s opinion. None of the American property buyers we have assisted with mortgages over the years has defaulted on their repayments; on the contrary, some of our American clients have been our best clients. So in our opinion a blanket policy for all Americans does not seem appropriate.

We are pleased to confirm that we know which banks continue to lend to American buyers earning in USD and we continue to offer very attractive mortgage conditions to them. Kevin Monger, co-founder of Mortgage Direct, was recently quoted in the Wall Street Journal as saying “he has recently found American buyers 20- to 25-year loans with a 1.75% fixed rate.”

We look forward to assisting you if you are interested in finance to purchase a property.