Mortgages in Spain

If you want to purchase a property in Spain, you may need an expat mortgage to buy your dream home in the sun. Before beginning your search, it is good to know how much you can borrow and from whom.

We identify borrowing amounts here and the lending criteria and deposit requirements you may have to meet before outlining how to get a Spanish mortgage as an expat. We also explore how buy-to-let properties work in Spain and whether remortgaging differs from the UK.

Can UK residents get a mortgage in Spain?

Yes, absolutely – though currently, no UK lenders offer mortgages for a property purchase in Spain. Spanish lenders may accept applications from foreigners, though some may limit how much you can eventually borrow – depending on what country you are from. Using the help of a Spanish mortgage broker can be beneficial as they’ll have in-depth knowledge of this market area. You would also benefit from instructing a specialist lawyer to help you through other aspects of the purchase, as there are many differences between UK and Spanish property law.

If you do secure a mortgage from a Spanish provider, it will usually have a variable interest rate. You may find fixed-rate deals, but if not, your product will typically be linked to Euribor (Euro Interbank Offered Rate). These mortgages are generally repayment products, too. It’s rare to find an interest-only mortgage product from a Spanish provider.

Once you have taken out a mortgage, lenders usually want you to have a bank account with them (so if you have a Santander mortgage, you’ll need a Spanish Santander bank account). Plus, lenders often want you to take out a home and/or a life insurance policy with them, too.

Other mortgage options

Alternatively, you could consider borrowing from a foreign lender who offers mortgages for Spanish properties. There are several banks in Luxembourg, Monaco, and Switzerland, but they typically only extend loans of at least €1 million for properties worth more than €2 million.

Rules, lending criteria and deposit requirements for Spanish providers

In general, Spanish providers have similar approaches to applications as UK lenders. However, due to being an overseas applicant, you may find that for some of their eligibility criteria, they are more stringent in their requirements, which we explore below.

Rules and affordability

As with UK mortgages, Spanish lenders conduct an affordability assessment to help determine how much they will extend. They often calculate a debt-to-income ratio, too, to ensure that your regular outgoings don’t exceed 35-40% of your net monthly income after your mortgage payment has been made.

Lending criteria

To be eligible, you’ll need to meet a number of requirements set out by the specific provider you are using. They are usually very similar to the criteria used by the majority of UK lenders on their standard mortgages:

Deposit requirement

Buying a home abroad in Spain usually necessitates a bigger deposit than you’d be asked for on a standard residential purchase in the UK. You can expect lenders to require a 30-40% deposit, though a broker could help you find a provider who accepts less. You may find that you can borrow at a higher loan-to-value ratio if you work and pay taxes in the country.

How to get a mortgage in Spain

To ensure you get your Spanish application off on the right foot, try following these steps:

Step 1: Collate your paperwork

Mortgage applications are much more efficient if you have all your paperwork ready before you start. Specific to Spanish applications, you must give your número de Identificación de Extranjeros (NIE). This is a tax identification number for foreigners. You’ll also need to provide other standard documentation as evidence of your address, income, nationality, deposit source and amount, and bank statements for an affordability assessment.

Step 2: Check your credit rating

As in the UK, bad credit is not automatic grounds for refusal by Spanish lenders, but knowing what’s on your credit history is beneficial. So, download your credit reports before you apply. Doing so can allow you to rectify any erroneous records. Or, if your record is correct, you’ll know which providers to avoid, given your past issues.

Step 3: Speak to an expert in Spanish mortgages

Seeking the help of a specialist Spanish mortgage broker can prove invaluable for your application. They have a wealth of knowledge and experience in that specific market, so they can better identify the most suitable mortgage provider for you – and more quickly, too. They do so by using their knowledge to balance all the factors in your financial situation – such as your income, credit history and deposit. That means you will get the best deal possible for your circumstances – maximising borrowing amounts while minimising repayments.

Make an enquiry online so we can match you with a suitable advisor.

How much could you borrow?

It will entirely depend on the lender you choose and their lending terms. Each Spanish provider has their own way of calculating lending amounts, so it’s difficult to say definitively how much you could borrow.

However, you can use our calculator below to give a rough guide:

Which lenders offer Spanish mortgages?

Santander and CajaSur are two options for banks in Spain you could approach. However, there are many more, all of which have their own lending requirements. To ensure your application is successful, it can be helpful to seek the help of a broker who will know which products you are eligible for and with whom.

How does buy-to-let work over there?

Spanish residential mortgages do not generally include terms and conditions that prevent the renting out properties. As a result, Spanish lenders don’t offer buy-to-let products like UK lenders do. It means you won’t be subject to the higher interest rates these loans attract in the UK.

However, the rate you finally secure could still be higher if you buy a property in Spain solely to rent it out. Your outgoings will be higher due to having a second property and, presumably, a second mortgage. A lender’s affordability assessment may then find that you are a riskier candidate and extend a loan with a higher rate to offset that risk.

Remortgaging a Spanish property

At some point, you may want to remortgage to take advantage of lower interest rates or to raise more finance. That’s possible to do in Spain through a couple of options. Firstly, you could cancel your current mortgage and take out another one. This can be expensive and attracts several penalty charges and fees. Plus, you must go through the process of applying for a mortgage again, which can incur further costs.

Or, you could transfer your loan to a new lender. This is a relatively new aspect of the Spanish mortgage market, so not all lenders offer or accept transfers. It can mean that it’s possible to take advantage of a lower rate elsewhere and that you are not charged some of the fees a new mortgage application would attract.

Things to look out for when getting a mortgage in Spain

When moving from the UK, it can sometimes be more complicated to get a mortgage in Spain because there are different rules, taxes and processes when it comes to property, not to mention a different language.

These factors include:

Speak to a broker who specialises in Spanish mortgages

Knowing that you are applying for the most suitable Spanish mortgage product with the right lender is tough to do on your own. However, doing so is key to securing a rate you can afford for the amount you need to buy your dream Spanish home.

A broker can be your best bet for securing a product that works for you. They’ll consider every factor in your financial situation and wider circumstances, plus what you need from a mortgage provider, to suggest the best lender. They’ll determine which provider offers you the best terms and conditions, whether you want a mortgage for a holiday home, a property you’ll live in full-time, or if you need to remortgage.

Our free, no-obligation broker matching service can connect you with an expert in Spanish mortgages. Call us on 0330 818 7026 or make an enquiry online, and we’ll contact you soon to match you with a suitable advisor.