Mortgage for Non-Residents in Spain: Complete Guide to Financing Your Home

Whether you're purchasing a holiday home, an investment property, or a retirement retreat, securing a mortgage as a non-resident in Spain can turn your property dreams into reality.

While the process is feasible, it comes with its own set of rules, requirements, and considerations. This comprehensive guide covers everything you need to know about securing a mortgage in Spain as a non-resident, from eligibility and documentation to mortgage terms and associated costs.

Who Can Apply for a Non-Resident Mortgage in Spain?

Non-residents, defined as individuals living outside Spain for more than 183 days per year, are eligible to apply for a mortgage. Spain鈥檚 property market welcomes foreign investors, and banks are generally open to offering mortgages to non-residents, although the terms may differ slightly from those offered to residents.

Eligibility Requirements:

  • Citizenship: Open to both EU and non-EU citizens.
  • Financial Stability: Proof of income and financial stability is required.
  • NIE (N煤mero de Identificaci贸n de Extranjeros): A tax identification number required for all legal and financial transactions in Spain. Read our NIE Guide here.

Non-resident mortgages are available for purchasing both holiday homes and investment properties, making it easier for international buyers to enter the Spanish market.

Residency and Tax Implications: When purchasing property as a non-resident, it鈥檚 essential to consider any potential tax implications both in Spain and in your home country. In Spain, property owners must pay local property taxes, and non-residents may be subject to an annual non-resident income tax, even if the property is not rented. Additionally, owning property in Spain could have tax implications in your country of residence, particularly regarding wealth or inheritance tax. Consulting with a tax advisor familiar with international property ownership can provide valuable insights and help you avoid unexpected tax obligations.

Maison Fuzei by Homerun Developments

Mortgage Conditions for Non-Residents

The mortgage terms offered to non-residents in Spain differ slightly from those available to residents. Non-residents seeking a mortgage in Spain should be aware of the country鈥檚 lending regulations. The "Banco de Espa帽a" provides official information on mortgage conditions, interest rates, and borrower rights. Here are the key conditions to be aware of:

1. Loan-to-Value (LTV) Ratio

Non-residents are typically offered a maximum LTV ratio of 60-70%, meaning the mortgage will cover up to 60-70% of the property鈥檚 appraised value or purchase price. Buyers must cover the remaining 30-40% with their own funds, plus an additional 10-15% to cover taxes and fees.

2. Mortgage Duration

Spanish banks usually offer mortgage terms of 20-25 years for non-residents. The term length will also depend on the borrower鈥檚 age, as most banks set an age limit of 70-75 years at the end of the loan term.

3. Interest Rates

  • Fixed-rate mortgages: These offer consistent monthly payments, with interest rates typically ranging from 2.5-3.5%.
  • Variable-rate mortgages: These are linked to the Euribor (Euro Interbank Offered Rate), plus a margin added by the bank, usually Euribor +1-2%, meaning the rate fluctuates with market conditions.

4. Repayment Types

Most non-resident mortgages in Spain are repayment mortgages, where the borrower repays both the interest and capital over time. Interest-only mortgages are rare and typically available only under specific conditions.

Documentation Required for a Non-Resident Mortgage

To apply for a mortgage as a non-resident, you will need to submit comprehensive documentation to demonstrate your financial capability. Commonly required documents include:

  • Personal Identification: Valid passport and NIE.
  • Proof of Income: Payslips, tax returns, and bank statements covering the last 3-6 months.
  • Existing Debts: Documentation of any other loans or financial commitments.
  • Proof of Funds: Evidence of the required down payment and other associated costs.
  • Property Documents: Details of the property, such as a preliminary purchase agreement and a property valuation.

The Mortgage Application Process

The process of applying for a mortgage in Spain follows these basic steps:

  1. Obtain an NIE and Open a Spanish Bank Account: These are essential for property-related payments.
  2. Pre-Approval: Securing pre-approval gives you a clearer picture of your borrowing capacity and signals to sellers that you are a serious buyer.
  3. Property Valuation: After identifying a property, the bank will arrange an independent valuation.
  4. Submit Documentation: Once you've gathered the necessary documents, the bank will review your application.
  5. Receive Mortgage Offer: The bank will issue a formal mortgage offer outlining the loan amount, interest rate, and repayment terms.
  6. Sign the Mortgage and Purchase Contracts: The final step involves signing the mortgage agreement and the Escritura de Compraventa (deed of sale) in front of a notary.

91导航 has strong relationships with the best mortgage brokers which we will connect you with to ensure you secure the best possible mortgage terms. Contact us, and we will help you get the process started smoothly!

Associated Costs and Taxes

In addition to the mortgage, non-resident buyers should budget for other associated costs:

  • Property Transfer Tax (ITP): For resale properties, this tax ranges from 6-10%, depending on the region. In Andalucia, the ITP is 7%.
  • VAT (IVA) and Stamp Duty (AJD): New properties are subject to VAT (10%) and Stamp Duty of around 1-1.5%. In Andalucia the Stamp Duty is 1.2%.
  • Notary and Land Registry Fees: Typically, these amount to 1-2% of the property price.
  • Mortgage Arrangement Fee: Banks often charge 1-2% of the loan value for arranging the mortgage.
  • Home Insurance: Required by most banks to cover the property and protect their financial interest.

Read our Property Law & Tax Guide here.

Benefits and Risks of a Non-Resident Mortgage

Benefits:

  • Leverage Your Investment: A mortgage allows