Spanish Purchase Mortgages

Non-residents can typically borrow up to 70% of a property’s value in Spain, with the exact terms depending on nationality, tax residency, and the currency you earn in. IMS specialises in this market and helps clients navigate Spanish bank criteria to secure the best available terms.

Get Pre-Approved Before You Buy

The buying process in Spain is safer when your finances are in place. We provide fully underwritten mortgage approvals in Spain, with no cost and no obligation.

We’ll assess your maximum borrowing capacity for a mortgage in Spain

A pre-approved Spanish mortgage helps you negotiate with sellers from a position of strength

A fully underwritten approval lets you make an offer with confidence

Contact us today for more information on obtaining a pre-approval for a mortgage in Spain.

Why Get Independent Advice When Arranging a Mortgage in Spain?

Many Spanish banks don’t publish fixed criteria or product terms. Within general guidelines, branch managers have discretion to set rates and costs for individual mortgages. This means a direct application offers no guarantee of the most cost-effective terms. As an independent broker, we use our knowledge and experience to negotiate on your behalf, so you get access to the best possible terms.

• We provide free advice and guidance
• We offer no-obligation Spanish mortgage financial approvals
• We help you establish your maximum budget
• We help you understand what cash deposit you’ll require

We make sure you know exactly what the purchase and mortgage process will cost, so there are no nasty surprises or misunderstandings at completion.

For independent, knowledgeable advice, contact us today.

How 2019 Regulation Impacted Timescales for Spanish Mortgages

Spanish mortgage regulation came into effect in June 2019, extending the overall time it takes to arrange a loan. You must now sign the binding mortgage offer at least 10 days before completion. This gives you a cooling-off period, and the offer is registered at a central notary office.

• Go through the Spanish mortgage process before committing to a property
• Start well before the point of contract, when non-refundable deposits become payable
• We’ll guide and support you through the entire process, protecting your deposit funds
• We explain everything you need to know clearly and concisely along the way

Ravena Rhys Jones, a regulated mortgage professional with Bank of Spain registration number D134, manages your Spanish mortgage application.

For more information on Spanish mortgage applications, contact us.

Non-Resident Spanish Mortgage Loan-to-Values

Spanish banks apply loan-to-value restrictions on mortgages in Spain. Loans are granted as a percentage of either the valuation or the purchase price — whichever is lower.

• Maximum loan-to-value for non-residents is generally 70%
• One lender, UCI, offers up to 75%
• Some lenders cap non-tax residents at 60%
• Further restrictions may apply for applicants living outside the EU
• Maximum loan-to-value for rústica (rural) property may be lower
• Loans above €500k can be subject to additional loan-to-value limitations

We specialise in securing the maximum mortgage in Spain for loans above €500k. Unlike in other countries, purchase costs can’t be added to the loan.

Need to understand more about loan-to-values? Ask us your question now.

How Long Is a Spanish Mortgage Term?

Most Spanish banks offer a range of mortgage terms. The affordability ratio each lender applies can influence the number of years on offer.

• Maximum terms range from 20 to 30 years
• Age limits apply, and the maximum age at the end of the term varies by bank, up to a maximum of 80 years old
• Spanish banks generally prefer to cap non-resident loans at a maximum of 20 years

To find out which mortgage in Spain is right for you, speak with one of our experienced advisers. Request a call.

Types of Loans Available in Spain

Spanish banks offer a limited range of mortgage types. These include variable rate trackers, full-term fixed rates, and mixed rate products, with more limited access to self-build and commercial lending. Standard repayment loans are the only product available in Spain — interest-only mortgages disappeared from the market after the Bank of Spain withdrew them.

• Fixed rate mortgages are now offered by most banks and are becoming more widely available
• Your earning currency can affect access to a Spanish mortgage — contact us to find out more
• Variable rates offer medium-term flexibility
• Full-term fixed rates are available at competitive rates and offer long-term stability
• Fixed rate loans carry higher early redemption penalties
• A couple of lenders offer mixed rate products, combining a shorter-term fix with a move to variable once the fixed period ends

Choosing between a fixed, variable, or mixed rate depends on your risk tolerance and how long you plan to keep the mortgage. A fixed rate suits buyers who want payment certainty and plan to hold the property long-term. A variable rate can work well if you’re comfortable with some fluctuation and may repay early. IMS reviews your circumstances and currency exposure to recommend the right structure for you.

Buy-to-let mortgages, where rental income counts toward affordability, aren’t available. Spanish banks don’t stop you renting out the property once you’ve bought it.

Most loans are for purchases only. Some banks offer remortgages or equity release, on a case-by-case basis.

Self-build loans are available, normally up to 70% of build costs. One lender will consider up to 70% of the total project cost, factoring in the value of land you already own outright.

Spanish loans for buying land alone aren’t available, so land must always be bought in cash.

Spanish Bank Affordability Ratios for a Mortgage in Spain

Spanish banks assess affordability differently from other countries. The main criterion is monthly affordability. Some lenders also factor in total capital owed. None work from gross income. At IMS, we understand exactly how each bank assesses an application. This saves you time and money, since we focus only on the right lenders for your circumstances.

• Spanish banks base affordability ratios on net, not gross, income
• Income must appear on personal tax returns
• Banks generally won’t consider undrawn company profits, and not all count the full dividends taken by self-employed applicants
• Treatment of buy-to-let mortgages and rental income varies by bank — a few won’t lend to applicants who already own more than one investment property
• Weighing debt against rental income can make it hard for buy-to-let landlords to meet affordability ratios
• Most banks consider 100% of after-tax net income, though a few cap this at 80%
  Some lenders apply minimum earning thresholds

As a general rule, your total monthly outgoings — including the new mortgage — need to come in under 35% of your net income.

Spanish banks don’t consider asset wealth and investment income in isolation. We specialise in helping financially complex applicants secure the best possible mortgage in Spain. We’re experts at helping Spanish banks see the full picture of an applicant’s financial strength.

Complete our online form for your personal assessment.

Interest Rate Levels for Spanish Non-Resident Mortgages

Spanish banks generally tailor their rate to each client. They weigh the overall quality of the application, including affordability ratios and the maximum loan-to-value required. A well-prepared application, submitted by an experienced broker, puts your case in the most favourable light.

• Variable rates are trackers, based on a margin above the 12-month Euribor
• The margin above Euribor varies from bank to bank
• You may need linked products to secure the lowest rate
• Banks often tie their best rate to compulsory products, so compare every element, not just the headline rate
• Lenders must also offer a rate option without linked products

Banks adjust variable rate loans against the Euribor on the review date, typically every 6 or 12 months. Check our best buy tables today.

Banks fix fixed rates for the full term of the loan. The rate offered depends on the number of years the mortgage runs.

Mixed rate mortgages combine both approaches — a fixed rate for an initial period, followed by a variable rate for the rest of the term. Only a couple of lenders offer this option, so availability is more limited than fixed or variable products.

Early Repayment Penalties for a Mortgage in Spain

Under a law introduced in June 2019, early repayment penalties can’t exceed 0.25% during the first 3 years, or 0.15% over 5 years — you can choose between the two options. After this period, the penalty drops to 0%. This rule applies to both partial and full overpayments on variable rate products. Higher penalties apply to fixed rates.

• Banks calculate penalties as a percentage of the amount overpaid, not the original capital borrowed
• Maximum redemption penalties on fixed rates are 2% during the first 10 years, dropping to 1.5% after that
• Banks can only apply the higher penalty if they can prove an actual interest rate loss
• Banks charge fixed rate penalties as a percentage of either the rate loss or the capital overpaid, whichever is lower

You can sometimes negotiate lower early repayment penalties for partial overpayments, since not all lenders apply the maximum allowed. If you plan to make regular overpayments, it may be worth trading fixed-rate stability for more flexibility.

Variable rates generally carry lower early redemption costs. We can help you decide what works best for your needs.

The Cost of Completing a Spanish Mortgage

Mortgage costs in Spain fell significantly in 2019. Spanish lenders no longer pass on mortgage deed tax, or the notary and land registry costs tied to the loan deed.

• Spanish banks normally charge a bank opening or arrangement fee, taken from the gross loan amount at completion
• This fee typically ranges from 1% to 2% of the loan amount
• You’ll also pay a valuation fee, due when you instruct the valuation
• Valuation fees average around 0.10% of the property’s value, with a minimum of roughly €350

Broker fees for arranging a Spanish loan vary. Rather than charging a percentage of the loan, we charge a set fee and no application fee — this can mean significant savings on larger loans.

It’s worth budgeting a small buffer beyond these figures. Banks often retain slightly more than the exact registration cost, since this isn’t known until the Land Registry approves the transaction. Any surplus is refunded once all invoices are settled, so this isn’t an additional cost — just a temporary hold on funds you’ll get back.

Contact us today for more information on buying and loan costs.

Bank of Spain bulletin outlining changes to mortgage regulation

Spanish Land Classifications and Other Loan Restrictions.

Spain has two main land classifications: Urbana and Rústica. Knowing which classification a property sits on matters, as it can directly affect the lending available. Other restrictions also apply to self-builds, off-plan purchases, and major reforms.

• All Spanish banks lend against residential property on Urbana land
• Not all banks lend on Rústica or other classifications — where they do, it’s normally at lower loan-to-value
• Check the Nota Simple — an official Land Registry extract confirming ownership, boundaries, and any charges on the property — early in the process, to establish its land status
• Only a handful of Spanish banks offer construction loans or loans for large-scale reforms, and loan-to-value restrictions apply
• Self-build mortgage rates are likely to be higher than average

Before committing to a property, check with us on the type of purchase and how it might affect your borrowing options. Contact us today.

Homebuyer Valuations for a Spanish Mortgage

Spanish lenders work with a panel of Bank of Spain-authorised valuation companies. They’ll prefer you use a company from their panel, though they can’t legally insist on it. In practice, some banks won’t proceed unless you do. A bank-instructed valuation can often work out cheaper than an independent one, due to the volume of business the bank brings.

• Formal valuations can only count square metres officially registered at the Land Registry
• Unregistered overbuilds or extensions won’t be included — any change not reflected in the Land Registry falls outside the valuation
• Lenders generally prefer to use their own appointed valuation company
• Under 2019 legislation, you can instruct an independent valuation instead, provided the company is Bank of Spain-registered and the report is specifically for mortgage purposes
• A standard bank valuation is similar to a homebuyer’s report, but it isn’t a structural valuation
• A bank-instructed valuation doesn’t indemnify you against future structural problems

If you need this, we can help arrange one, and we’ll explain how it differs from a standard bank valuation before you commit.

Spanish Mortgage Deeds

Banks sign all Spanish mortgage loans at the notary, on a separate deed from the purchase deed. Both deeds are in Spanish, so you’ll need someone fluent in Spanish to attend, or you can appoint a lawyer to sign on your behalf under a specific power of attorney (POA).

• In the absence of a consumer credit act, banks write loans into a legally binding deed, which all parties sign at completion
• You can’t change the deed’s terms after signing — you’re legally bound from that point
• The notary must ensure you fully understand the deed’s content before signing
• If you’re completing with a power of attorney, the POA must cover everything related to both completion and the mortgage — if it doesn’t, your representative won’t be able to sign on your behalf at the notary

Changes beyond an agreed rate reduction, a switch to a fixed rate, or a term extension require a new deed, which carries additional mortgage costs. Novations — changes made without a new deed — cost up to 0.15% during the first 3 years, and nothing after that. Switching from variable to fixed carries no charge, though admin fees may still apply.

A novation still requires the bank’s agreement, and any change is formalised through a new document signed at the notary — though this is more straightforward than a full new deed. It’s worth requesting written confirmation of the new terms before signing, so there’s no ambiguity about what’s changed.

Subrogation of Mortgages in Spain

Subrogation means a buyer takes over the seller’s existing mortgage deed. You can’t port an existing mortgage to a new property in Spain — loans are linked to the property, not the individual.

Many historic loans carry preferential terms, so a number of banks have stopped offering subrogation. That said, it’s always worth checking whether a suitable loan already exists against the property you’re buying.

• First, review the terms and conditions of the existing loan
• Establish what capital remains outstanding
• Check whether the current bank would consider subrogation

Subrogation’s key benefit used to be avoiding mortgage deed tax. Now that banks absorb this cost themselves, subrogation is less advantageous overall. That said, subrogating a developer’s loan when buying off-plan is always worth investigating — rates in these cases often reflect resident rather than non-resident conditions.

If subrogation looks viable, the bank will still assess you as the new borrower, even though the loan already exists. This means your income, affordability, and documentation are checked in the same way as a new application. Subrogation can speed up completion, but it doesn’t remove the need for full underwriting.

Contact us today for more information on how Spanish mortgages work.