Are you thinking of buying a property in Spain? One of the main sticking points for many UK buyers is how to find the perfect mortgage for their dream holiday home.
There are no restrictions on foreign buyers in Spain, however, there are some differences when it comes to finding a mortgage and buying property in Spain. Here is what you need to consider before applying for a Spanish mortgage, plus the buying costs.
What types of Spanish mortgages are available?
The good news is Spain’s selection of mortgages is no different than the ones you would find in the UK. In some cases, they also offer mortgages for ex-pats, so make sure you shop around.
The main difference between residential and non-residential loans is the maximum loan-to-value (LTV) which banks will allow. A Spanish resident can usually borrow up to 80% of the property’s assessed value. On the other hand, a non-resident is limited to 60%-70%. This means that if your property is valued at 120,000 euros, then you will still need to find 36,000 euros to pay for the 30% not included in the mortgage.
What to do before applying
Firstly you will need your Número de Identificación de Extranjeros (NIE). It is similar to your national insurance number and you cannot purchase property or arrange a mortgage without an NIE.
If you’re still in the UK and are organised, then you can apply through your local Spanish consulate. If you’re already in the country, then you can visit your local police station and arrange for your number there. Do some research beforehand to ensure you have the relevant documents and funds to pay your fees.
So where do I need to apply to?
Most Spanish banks will offer mortgages to non-residents. You can also secure a mortgage through an international bank such as Barclays or Santander.
We would advise that you start shopping around as early as possible. The official mortgage process can only start after a sales agreement has been reached. It is also advisable to shop for a mortgage whilst looking at property that you are especially interested in buying. This is because certain mortgages might limit the type of property you can buy. If you already have an agreement in place that doesn’t suit the home you have in mind, you could be left out of pocket.
Before you can apply for your mortgage, you will need to be able to provide the following:
• NIE number
• Proof of employment or income
• A pre-agreement with the seller
• Proof that the property tax is paid to date
• Details of your current debts and mortgages
• Copies of all your existing property deeds (in Spain and elsewhere)
• Records of your current assets
• Any prenuptial agreements (if applicable).
Once you have submitted everything to the bank and the underwriters have processed everything, the bank will make you an offer. We would advise you haggle with them for a better deal, or take the quote to a competitor.
