For decades, mortgages in Spain have been one of the most sought-after financial products, despite rising interest rates and stricter credit conditions. Mortgages in Spain for non-residents are issued for foreign buyers who do not have the status of fiscal residents. As a rule, Spanish banks impose higher requirements on non-residents: the documents review takes more time, and the package of documents itself can be extended at the discretion of the bank.
Mortgages in Spain for Non-Residents in 2023: General Terms
The new mortgage law, which entered into force in 2019, provided the maximum protection for borrowers, and also introduced such a concept as a «foreign currency loan». Non-residents who take out mortgages in Spain gained the right, in certain circumstances and under certain conditions, to convert debt into a currency other than the euro. This is possible if the borrower’s country of tax residence has a different currency, or if the borrower’s income or fixed assets are denominated in a different currency.
Many Spanish commercial banks did not like this and stopped lending to foreigners. However, large banks still work with non-resident clients, and you could contact them when needed. These banks include Banco Santander, Banco Sabadell, CaixaBank and Bankinter.
The bank’s loyalty to a non-resident borrower directly depends on which country he is a citizen in, or where his permanent residential place is.
The high degree of loyalty among Spanish banks is manifested in relation to the following countries:
- European Union;
- European countries that are not members of the EU, but have a stable economy (Great Britain, Norway, etc.);
- other countries with stable economies and currencies (Australia, Canada, Japan, USA, etc.).
The low degree of loyalty of Spanish banks is manifested in relation to countries:
- with an unstable economy (most African and Latin American countries);
- with an unstable geopolitical situation (Russia, Ukraine, Belarus, North Korea, China);
- having offshore status.
Do not forget that the Spanish banking sector is bound hand and foot by European and internal regulations that guard against money laundering. Also, the closest attention is paid to non-resident clients, whose income, investments and operations must be absolutely legal and transparent.
Mortgage Conditions for Non-Residents in Spain in 2023
Once again, we note that the mortgage conditions for non-residents in Spain are more stringent than the conditions for citizens and residents:
- financing up to 60, maximum – up to 70% of the transaction cost or the estimated market value of the real estate object (the smallest amount of the two is chosen);
- loan term up to 20 years;
- fixed or floating interest rate, often higher than for resident borrowers;
- fees for a mortgage loan arranging;
- monthly mortgage quota cannot exceed 30-35% of earned income.
As a rule, all Spanish banks publish the current mortgage conditions on their websites. However, all these conditions apply for residents.
We recommend that non-residents apply directly to banks and conduct negotiations based on their individual situation.
However, Banco Santander offers a Spanish mortgage calculator for non-residents called Hipoteca Mundo para No Residentes. Let’s use it to get results framework.
Given: a non-resident foreigner buys a property in the province of Alicante for 200,000 €, having a confirmed declared income of 3,000 € per month.
Mortgages in November 2023 will have the following characteristics:
- Maximum loan amount is 140.000 €;
- Maximum loan term is 20 years;
- Interest rate to choose from:
- Fixed: from 5.91% in the first year and from 6.51% starting from the second year
- Floating: from 2.57% in the first year and from Euribor + 2.57% starting from the second year
- Mortgage arrangement fee is 700 €.
If we reduce the value of a property to 100,000 €, and income to 2,000 €, then the maximum loan amount will be 70,000 €. The conditions and rates will remain the same, but the mortgage registration fee will be halved to 350 €.
These are good enough conditions for today. Market analysts note that such rates will not last long, and inevitably, it is worth waiting for their increase in response to the continued growth of Euribor and inflation.
At the end of 2022, the demand for mortgage loans fell drastically due to an equally sharp increase in the Euribor and higher interest rates. The National Statistics Institute of Spain announced a decrease in the number of issued mortgage agreements in December 2022 by 23.5% compared to November 2022 and by 8.8% compared to December 2021. At the same time, the average interest rate increased by 4.7% in December 2022 compared to November 2022 and by 42.1% compared to December 2021.
In order to stimulate demand again, almost all banks revised floating interest rates, reducing the fixed interest added to the Euribor value by an average of 0.50%.
Mortgages in Spain for Non-Residents in 2023: Required Documents
The list of required documents in each particular bank may vary. However, the package of basic documents required by absolutely all banks includes:
- Copy of passport or ID card, as well as a Spanish NIE certificate.
- Certificate of fiscal residence from the country of permanent residence.
- Employment contract and salary slips (or certificate of employment indicating the position and salary) for the last 6-12 months. If we are talking about an entrepreneur, an extract from the relevant register or tax authorities is required. If dividends are used as income, the relevant constituent documents have to be submitted.
- Tax return for the current and previous years.
- Bank statements showing the movement of funds and the closing balance for the last 6-12 months.
- If there is other property, documents of ownership are needed.
- Extract from the credit history.
- Agreement of reserve signed with the seller or developer of the selected real estate object, and Nota Simple Informativa if the building has already been put into operation.
- Appraiser’s opinion on the market value of the property.
All foreign documents must be translated into Spanish by a sworn translator.
