Take out a mortgage or pay the full cost in one go? This is one of the questions that arises when buying real estate. Increasingly, the majority is leaning towards mortgages. In June alone, according to the Statistical Organization INE, 37,961 mortgages were issued in Spain and the figures continue to rise.
But can foreigners take out a mortgage from a Spanish bank? Yes, they can, subject to certain conditions.
First you need to decide what type of lending is most suitable for you. In Spain, you can choose from 3 bank rate options:
1. Fixed – remains unchanged throughout the entire crediting period and averages from 2% to 4%.
2. Floating – calculated based on the value of the European interbank rate Euribor can change every 6 or 12 months.
3. Mixed – from 1 to 3 years a fixed rate is established and then a floating interest rate is applied.
Amount of funding
After the application for a mortgage loan has been submitted, the bank evaluates the acquired object and, on its basis, allocates funds for its acquisition. Residents of Spain or EU countries can get 60-80% on credit, and non-residents – 50-70% of the appraised value of the property or the price indicated in the deed of sale (escritura de compraventa). The loan amount is calculated based on the smallest amount.
Mortgage term
Usually issued from 5 to 35 years old, depending on the availability of residence and the age of the applicant. For residents, the term, as a rule, does not exceed 30-35 years, and for non-residents of the country – no more than 20 years.
Loan repayment
Payments are made monthly. The amount and frequency of payments must be specified in the contract. For late payments, penalties are charged, and in case of delay for six months or more, the bank has the right to collect the loan debt through the court.
At the same time, the amount of payments should not exceed 35% of the total monthly income for whom the loan was issued.
What determines the successful approval of the mortgage and the rate itself?
– the age of the property buyer
– solvency and financial stability
– properly executed documentation
Documentation
Spanish banks do not have a single package established by law, but they have basic documents on which to rely:
– foreign passport and resident card (if available)
– NIE (tax number of a foreigner)
– a copy of the preliminary sales contract
– proof of income (tax declaration for the last 2 years, employment contract / certificate from work or registration of an individual entrepreneur)
– demonstration of other sources of income (renting out real estate, inheritance, selling real estate, etc.)
– statement of account from all banks on cash flow for the last 3 months
!!! All documents must be translated into Spanish by a sworn translator.
Loan approval takes 2 to 5 weeks, depending on the specific case.
Do you need to get a mortgage in Spain? We advise you to contact our specialists so as not to be rejected or to fall under unfavorable conditions. We will help at all stages from choosing a bank to preparing and submitting to the bank a correctly executed package of documents. And if you are abroad, we will open a mortgage remotely.