Buying property in Spain: Spanish mortgage guide

Step 1. To get a mortgage in Spain you need ID and a deposit

At some point during the buying process, you will need to apply for an NIE number as you will need one to sign for your mortgage deed. People already renting in Spain can do this at a local police station. If you’re moving from overseas, you can apply through the Spanish consulate or you give a power of attorney to your lawyer, they have the ability to obtain this for you which can be the easier option.

You will also need a Spanish bank account in order to pay your deposit so open one as soon as you can! You can also open a bank account once you know what bank will offer you the best mortgage deal if you are using a mortgage to assist with the property purchase.

Make some important decisions about what kind of property you want, the maximum price you are prepared to pay and where you want to buy. Find your dream home on our property portal to then use our budget calculator to work out the kind of mortgage you’ll need and the amount you might have to borrow.   

It’s advisable to speak to a qualified finance adviser prior to beginning your overseas real estate hunt as you can get to grips with the financial aspects of a potential transaction to ensure that you move forward with your eyes wide open from the start. Regulated Independant Spanish mortgage advisers are able to offer official mortgage Agreement in Principles (AIPs) for potential borrowers before a purchaser actually financially commits to a particular property transaction. Having your mortgage pre-approved means that you are basically a cash buyer and the purchase can be completed quickly which is attractive to vendors.  It is possible to change the property and the corresponding Nota Simple during the mortgage application process.

Step 2. Calculate extra costs

Buying a property in Spain is different to what you may be used to in other countries so it is essential you get informed of the extra costs on top of the net purchase price before you decide to take the plunge. Costs which need to be taken into account are property taxes, notary costs, land registry costs, any legal advice costs and mortgage costs. These can be more expensive than in your home country. 

Taxes

There will be transfer and stamp duty taxes to pay on your property. These will depend on the price of the house, the region of Spain the property is located and if you are considering a new build or second-hand resale purchase. It is advisable to seek independent legal/conveyancing advice from a qualified legal expert to ensure you receive correct information ASAP.

Bank mortgage fees

With the implementation of new mortgage laws in 2019 as mentioned above, the cost of setting up a mortgage in Spain has greatly reduced.

Banks can charge a mortgage arrangement fee which can range from 0 - 1.5% of the loan amount.

You will have to pay for a property valuation from a Bank of Spain registered valuation company, some lenders will refund this cost to the client once the mortgage has completed.
All other costs relating to setting up the mortgage such as notary fees, taxes and land registry costs must be bourne by the lender at all times.

Total costs on top of the net property price including taxes, legal and bank fees can usually be around 10% - 15% of the property price. Once again, ensure you seek compliant, independent conveyancing advice to ensure you know what you are getting involved with prior to committing.

Step 3. Choose a Spanish mortgage provider and product

Spanish Mortgage Brokers are now regulated so make sure your mortgage broker is fully licenced and registered by the Bank of Spain under LCCI 5/2019.

All lending institutions in Spain must be fully licenced. Banco Santander, Banco Bilbao Vizcaya Argentaria (BBVA), and Caixa Bank are the largest, but there are many more options all with various mortgage products to consider and choose from.

Make sure the institution you choose has regional branches near your new residence, and check to see if they have in-house professionals trained to deal with your circumstances.

The amount you can borrow for a home-owner mortgage depends on whether you are a Spanish resident for tax purposes or not. People who pay their taxes outside Spain or second home buyers will be offered between 50-70% of the purchase price based on the applicant's circumstances, whereas for residents who pay Spanish taxes, the loan-to-value can be closer to 80% - 90%.

Fixed, variable & fixed rate deals are available to most applicants and some lenders offer mortgage loans in GBP, Dollars and Swiss Francs if the applicant's main income is derived from these currencies. The benefit of having a Spanish mortgage in your own currency is that you take away any currency risks on the monthly payments. 

Most mortgages granted in Spain are given on a capital & repayment basis. Interest-only options are not generally available through traditional Spanish banks although some international lenders can offer interest-only options but generally only on property values of 3 million € or above.
Variable rate mortgages are the most flexible in terms of being able to make overpayments or cancelling the mortgage at any time without redemption penalties, fixed rate deals generally have a maximum 2% early redemption charge if overpayments are to be made.

Off-plan home developers cannot oblige you to get a mortgage from their chosen bank although it is definitely worth considering against other options that are on the market. 
Most Spanish mortgages are linked to the 12-month EUROPEAN INTERBANK OFFER RATE or EURIBOR, you can view current EURIBOR rates here - https://www.euribor-rates.eu/en/current-euribor-rates/ 

A repossession may only be available to buy through the bank that owns it, but you could get up to 100% of the house price financed.
You can get a construction or a self-build mortgage if you’re buying land for development, but as these are complicated it’s advisable to speak to a broker. Potentially you could borrow up to 70% to 80% of the total build cost.

You can get a commercial property mortgage if you’re buying space for trading reasons. Although the loan-to-value is significantly lower for this type of purchase, typically 50 - 60% Loan to Value (LTV).

Step 4. Get a mortgage!  

Apply to a lender directly or through a qualified mortgage broker for a mortgage. To do this you will need, proof of income, up-to-date tax records, details of any current debt, copies of existing property deeds, and if relevant, details of any other assets or prenuptial agreements. 

While an NIE number isn't required to apply for a Spanish mortgage or to get a Spanish mortgage pre-approval, you do need the NIE certificates before you sign for the mortgage deed.

If your application is approved, you will need to set up a bank account and transfer money for the bank’s property valuation.

Mortgage valuations are a crucial element to the mortgage approval process, therefore you may wish to hand the entire mortgage process to a mortgage broker instead of relying on a bank to have control of this process. 

Some lenders will only use a small number of valuation companies, this could cause complications to your application if the banks valuers are conservative in nature.

The official valuation may differ from the agreed purchase. This could be more or less but if it’s the latter you’ll need to cover the deficit yourself which can be unexpected.

If there are no legal issues and you have the right amount of money transferred into your new bank account then you can book a completion date with the seller and public notary and do the paperwork required.

Be aware, that there is a 10-day mortgage cooling off period which has to be adhered to before you can complete the property transaction and this period must be taken into account when negotiating completing dates with vendors. A registered mortgage expert can guide you through all the different stages of the mortgage process ensuring that you and all other parties involved are fully aware of what is happening at any given moment in time. 

On completion day your lender will arrange payment for the house and pay the relevant taxes through the public office in the presence of a notary.

Once all the finances have been exchanged and contracts signed, you should get the deeds and the keys to your new home!

This whole process can take 6-8 weeks if everyone included has the legal rights, documents and finances to begin with. It’s worth noting that if you want to relocate to Spain for more than 183 days in the year, then you will need to pay residential taxes, which include capital gains tax, investment tax and wealth taxes. There is further information on the legal process of buying property in Spain on the Spanish Mortgage Association website. It’s also worth checking with your country's foreign office for country-specific information (the UK, EU and USA offer advice in the English language) or you can read our Spain Buying Guide for further insight.

The information in this guide is correct as of 21st February 2023 and can be subject to change.