FAQ: Taking out a mortgage in Spain

Expert answers to some of the most frequently asked questions about taking out a mortgage in Spain.

Mortgage rates in Spain are at or close to historic lows, and new mortgage lending is growing at a fast clip. With money so cheap, and the Spanish property market in recovery mode, there are good arguments in favour of using a mortgage to buy property in Spain today.  And cash buyers from the UK might now need to consider a mortgage after Brexit reduce the value of their potential equity.

I know many of my readers are interested in knowing more about the process of taking out a mortgage in Spain, as I get sent a lot of questions, either by email, or in the forum, or in comments to my articles. So I prepared a list of frequently asked questions (FAQ) and sent them to Alvaro Valera, the HolaBank regional manager for Southeastern Spain (Andalucia and Murcia), for expert answers. Alvaro was based in London for many years, and has enormous experience working with foreign borrowers. You can see the FAQs and his answers below.

HolaBank specialises in providing financial products and services to foreigners in Spain, with a branch network of offices on all the main coasts and islands. They are part of CaixaBank – one of Spain’s largest financial institutions – who I bank with myself, and for full disclosure they advertise at this website. If you need to open a bank account in Spain, or a thinking of changing banks, visit any branch of HolaBank, or call +34 91 832 98 98 / visit www.planlivingsolutions.es to find out how HolaBank’s Plan Living Solutions can be your personal assistant in Spain.

Spanish Mortgage FAQ

Q: As a non-resident, can I get a mortgage in Spain, or do I have to be a resident?
A: You can get a mortgage in Spain as both resident and non-resident.

Q: As a rule of thumb, what loan-to-value (LTV) can a non-resident get?
A: Typically up to 60%

Q: When determining the LTV, how is the property valued?
A: The lesser value between purchase price and valuation

Q: As a rule of thumb, what is the debt-to-income ratio (interest payments as a % of net disposable income)?
A: Interest & capital payments should not exceed 30% of net disposable income.

Q: As a non-resident, what is the maximum term in years I can borrow for?
A: 20 years

Q: And what is the shortest (minimum) term?
A: 5 years

Q: What is upper age limit for getting a mortgage in Spain?
A: 75 years old

A: How long does it take to get a mortgage in Spain, from first contact to having the funds available, assuming I’ve already found a property to buy?
Q: Typically around 4 to 6 weeks.

Q: Can I get a fixed-rate mortgage in Spain?
A: Yes

Q: Can I get an interest-only mortgage in Spain?
A: No

Q: Do buy-to-let (BTL) mortgages exist in Spain?
A: No, there aren’t any BTL schemes as such, but in certain cases, long standing customers with excellent financial profile may get a mortgage for a property that will be let.

Q: If I already own a mortgage-free property in Spain, can I get an equity-release mortgage on it?
A: No

Q: If I want to buy a property and renovate it, can I get a mortgage to cover the purchase and renovation costs?
A: It is complicated but might be considered for long standing customers with excellent financial profiles.

Q: If I already have a mortgage, and my property rises in value, or my income increases, can I top-up my mortgage, or do I have to take out a new mortgage?
A: You can’t top up a mortgage nor request a new one on the same property. Property values rise as well as come down. The purchase price originally paid by you is not altered by the increase or decrease in a property market value.

Q: What are the additional costs of taking out a mortgage in Spain?
A: Approximately 4% of the mortgage loan amount.

Q: Do I need an NIE number to get a mortgage?
A: Yes

Q: Can I get a non-binding mortgage offer in principle so that I know my budget before I go house-hunting, or do I have to find a property first to get an offer?
A: At CaixaBank it is possible to take a decision in principle up to 10 months prior to completing the purchase, subject to changing mortgage rates. But it is important to stress that this pre-agreement is essentially a letter of intent that is subject to a property valuation and a re-assessment of the customer’s financial circumstances if more than three months have passed since the initial application.

About Mark Stücklin

Mark Stücklin is a Barcelona-based Spanish property market analyst, and author of the 'Spanish Property Doctor' column in the Sunday Times (2005 - 2008). He can be reached by email on ms@spanishpropertyinsight.com. All articles published in good faith as a general guide but no substitute for professional advice. Please read the SPI disclaimer