The number of foreigners or expatriates who buy a home in Spain is growing exponentially. There are more and more people interested in investing in housing or looking to acquire a second home or a vacation residence. In these cases, the conditions for applying for a mortgage present notable differences with respect to ordinary mortgages: they allow financing up to 70% of the property, compared to 80% of ordinary loans, which tend to have higher interest rates and require the presentation of numerous documents.
En Miguel Lopez International Lawyers we are especialists in advising and accompanying foreigners in all their needs in Spain. We summarize below the conditions, requirements and documents necessary to contract a mortgage in Spain as a foreigner.
Tax residence as a key point
The most important thing when buying a home and requesting a mortgage is to take into account the place where we pay most of our taxes, that is, our tax residence. It is easier to access it if you are located in Spain, since, if you are in another country, you will have to apply for "mortgages for foreigners" or "mortgages for non-residents". These mortgages are offered by most of the Spanish banks.
The main difference between mortgages for foreigners and non-residents is based on the fact that, in the event of default in payment, banks have more difficulties in activating specific measures to recover the loan money. This is because, by having tax residence in another country, the bank has fewer means at its disposal to proceed against the borrower in the event of non-payment.
Documents to request a mortgage if you are a foreigner or reside outside of Spain
The documentation that non-residents must provide is usually very similar to that requested for the study of a mortgage from a person residing in our country. These are the usual documents that a foreigner needs to provide to request a mortgage:
- Photocopy of the NIE or passport.
- The certificate that proves that you are not a resident of this country.
- The employment contract.
- The last payroll or proof of income obtained in your country of residence.
- The bank statement of the last months where the payroll or usual income is entered.
- The tax declaration.
- The certificate of tax residence.
- Contract of the property that you are going to acquire (or the deposit contract).
- The last three outstanding debt receipts, if any.
What are the differences between a resident and non-resident mortgage?
- The repayment terms, the loan amount and the interest paid will depend on the characteristics that each bank applies to each mortgage product for non-residents. However, in most cases we find elements common to this type of mortgages.
- In the case of mortgages for foreigners, the most common is that the loan does not exceed 60-70% of the value of the home, as opposed to the 80% that usually rises in ordinary mortgages.
- In order to acquire a home in Spain accessing financing through one of these mortgages, we must have saved approximately 40-50% of the total price of the home.
- The interests that non-residents usually pay for mortgages are higher than in conventional mortgages, since it is understood that they are intended for second homes.
Reasons why Spain is one of the best places to get a mortgage and financing
- Avoid paying the initial charges: After the implementation of the new mortgage law, banks are responsible for paying the installation costs related to the mortgage, such as the famous Tax of Documented Legal Acts (AJD). This implies a significant reduction in costs.
- Pay with the currency of your country: If you are from a country outside the Eurozone, you can make mortgage payments with euros or with the currency of your country of origin. The exchange rate will be fixed throughout the life of the mortgage payment and equivalent to the one at the time of signing.
- In Spain, as a general rule, banks finance up to 80% of the purchase of a home, so the borrower must contribute the remaining 20% (plus purchase and sale expenses). However, there are entities that increase that percentage up to 90% or up to 100%.
- Financing aid for young people: job instability and high housing prices in big cities pull back many young people who are interested in buying a property. Many banks encourage access to mortgages by offering lower interest rates than those that apply if the applicant is over 35 years old. And, in addition, some entities waive to charge certain commissions or to demand the contracting of other products to obtain a reduced interest.
Therefore, for any foreigner residing in Spain, the way to access a mortgage is the same as for any national resident, with all the comforts that it entails. At Miguel López International Lawyers we are specialists in managing residency in Spain. If you have any questions, ask us about your case and we will assist you personally.