In fact, they are at the lowest they have been during the past 30 years. We are talking about one of the countries in the whole Europe with the lowest rates. Which makes it pretty good for you in order to get financing.
So, if you are wondering which is the main downside of this new policy, you can find it on the loan-to-value. We will talk more about that in a minute. Are you from a non-European country? Good news for you. You can now choose to realize the mortgage repayments with euros or with the currency of your home country.
You can choose to pay the loan with pounds or with euros. And that is something you will decide when signing the mortgage contract. The exchange rate will be fixed throughout the whole life of the mortgage repayment. All the before mentioned factors should make it obvious for you to avoid using a lender from your country of origin and ask for a mortgage in Spain. And not only due to the lowest total cost and the money you could save as we have seen , but also due to the reduction of bureaucratic complexity.
In Spain there are three main types of mortgages : variable adjusted with the Euribor , fixed , and mixed a combination of both. Buy-to-let and interest-only mortgages are not available in the Spanish territory. Even though the financial products are exactly the same for both residents and non-residents , some differences may arise.
And those differences stem from the basic conditions of the loan. As we said, no matter how many days per year you stay in the country the factor that defines if you are a resident or not , the mortgages you can get are exactly the same. However, you will enjoy more favorable conditions if you are a Spanish resident. In this section, we will analyze the basic information that you need to know when requesting a mortgage as a foreigner.
We are talking about the different conditions you can expect to get after receiving your offer. This is something really important to know, as it will help you have clear expectations of the money you will need and what it will all cost you.
And, after the application of the new law that we talked about before, it has dropped significantly. The Spanish system is much simpler than the mortgage system in the UK , for example. And here we basically find fixed or variable mortgages. This is a crucial step. Calculating how much exactly will you need to pay, beforehand, to buy the property. How much money you need to have in the bank today to be able to purchase, not taking into consideration the mortgage to be received.
And, in order to know that amount, you should bear in mind:. That is what you will have to pay at the beginning without any loan. The terms are usually from 5 to 40 years maximum. If you are a non-resident you will be moving towards the lower end of this range , and residents will usually get years term to repay the mortgage. Furthermore, there may be additional restrictions. This will vary from bank to bank, but they will concede loans to be fully repaid before you reach 75 years old.
More than that will be really rare. Primary Residence Mortgages. Primary residence mortgages are for those who will live in their property in Spain as their main residence and pay their income tax here. Investment Mortgages. Investment mortgages are for those property buyers planning to rent out their property after purchase. Commercial Mortgages. Commercial mortgages, including mortgages taken out by companies, are for those who seek to buy property for commercial purposes and might include investment mortgage.
If you are an American living in Spain with a non-lucrative visa, the buying process is a bit more difficult, but Mortgage Direct nearly instantly connected us with a bank that understood our situation and approved us for a mortgage. In addition it was a pleasure dealing with you personally, so if you ever need us to supply a reference to any other potential customers we would be delighted to do so. Once again many thank, your help has been really appreciated by both of us.
I have found Mortgage Direct to be extremely professional and efficient in finding me a very good mortgage product. I would highly recommend their company to those estate agents who are not currently using their services. Mortgage Direct S. Bozena is very supportive and tells it to you straight. Solid, expert advice. The service with Mortgage Direct was swift and the communication was excellent. The mortgage that they offered me was far better than the mortgage offered by my bank. I felt reassured and informed at every turn.
Bozena worked tirelessly through applications to four banks, and we thankfully got a loan. We pass along the highest recommendations for Bozena. They are also only available to residents. Their main advantage is lower monthly repayments, but they work out more expensive because of the extra time taken to pay off the capital. You may want to consider taking out a mortgage in a currency other than the euro. The main benefit of having a mortgage in your currency e. On the other hand, non-euro mortgages are more difficult to obtain and Spanish banks tend to charge more for this type of loan.
Financial experts advise that the best way to minimise currency risks is to have the asset and loan in the same currency. In this example, you would use rental income to pay your loan. One of the disadvantages of taking out a Spanish mortgage is that the transaction involves several costs. These are levied in addition to the taxes and fees charged as standard on a purchase. Link to buying taxes In this section, we list the costs incurred when you take out a loan to buy a property in Spain.
It used to be the case that the buyer took on all costs associated with a mortgage, but in recent years, consumers have successfully won high-profile court cases against the banks and reclaimed mortgage costs. This is not a given, however, so before signing your mortgage clause, make sure you fully understand which costs are to be paid by you and which by the bank. In order to approve a mortgage loan, the bank first needs to carry out a valuation on the property.
This is a compulsory step and costs vary depending on the property price. Expect to pay between a few hundred euros and several thousand. Note that the valuation is usually carried out by a valuer named by the bank, not one chosen by you. Who pays: since the bank is the party interested in ascertaining the value of the property it should pay this charge. All banks charge a fee for setting up a mortgage and approving the loan.
The fee is levied on the amount loaned so the more you borrow, the higher the mortgage fee. Banks generally charge between 0. Who pays: the buyer you. AJD is levied as a percentage on the loan and the amount varies depending on the region of Spain. The notary charges a fee for the title deeds and notary services when you buy a Spanish property. Link to the buying process Buying with a mortgage involves an extra section on the title deeds with the subsequent additional charge. Who pays: there is room for negotiation on this charge and your bank may be open to paying for this.
As is the case with notary fees, Land Registry fees also rise when a mortgage is involved because the loan must be registered as a charge against the property. Who pays: as with notary fees, your bank may be open to negotiations on paying for this. The cost of this varies depending on the size of the mortgage loan and the work involved. When you take out a mortgage in Spain, you must also contract insurance for the property covering both the building itself continente in Spanish and its contents contenido.
The bank supplying the mortgage loan will offer to provide insurance cover as well — you are not obliged to take out insurance with them, but in practice, you are likely to get better terms and conditions for your mortgage if you do. Your bank may also offer life and mortgage insurance policies. Neither are mandatory for a mortgage loan in Spain, but you may wish to look into these for additional financial security. Always check the terms and conditions of insurance policies and beware of clauses that oblige you to take out a policy with your bank for the duration of the loan.
Insurance offered by banks is not necessarily the cheapest on the market. If you are buying a property in Spain that already has a mortgage, you may want to take over the loan yourself.
Fees to transfer a loan from the vendor to the buyer are around 0. Although there are mortgage fees that you cannot avoid, you may be able to negotiate lower charges on other fees with the bank. Competition for mortgages is fierce and your chosen bank may be willing to reduce valuation and mortgage fees in exchange for your business. But be aware that in lieu of fees, the bank may charge more for the mortgage itself or apply a higher interest rate.
Skip to content. Weigh up pros and cons. Think carefully about whether a loan is financially worthwhile for you and consider the financial implications for you if when mortgage interest rates rise. For further information about the advantages and disadvantage of a mortgage in Spain, see below.