Nowadays foreign citizens that apply for a mortgage to buy a property in Spain can expect to receive 50%-60% of the value of the property from the spanish banks that depends on the creditworthiness of a buyer.
How many years can you expect? In general the most mortgage terms in Spain run up to 25 years.
Mortgage payments should not exceed 35% of a borrower’s net annual income.
The types of mortgage in Spain:
- variable rate mortgages: mortgage payments vary according to the base rate set by the European Central Bank (EURIBOR).
- fixed rate mortgages: mortgage payments remain unchanged during all the mortgage term. These mortgages normally have higher interest payments in the short term but don’t run a risk of the increasing of payments in the future like the variable rate mortgages.
- mixed rate mortgages: mortgage payments remain unchanged during the first 5-10 years and vary afterwards.
The average interest rate for the residential property is 3-4%, for commercial property – 4-5%.
The final list of the documents that are required for a mortgage application in Spain will depend on a bank but the general documents are the following:
- NIE (foreigner identification number).
- private contract with a seller of a property.
- for employed: contract of employment, last 3 payslips and income tax return of the last 2 years.
- for self-employed: local tax on economic activities, VAT tax paid for the last quarter and the last year.
- for the business owners: constitutional documents, corporate income tax statement for the last 2 years and dividends distribution.
- proof of the annual property tax (IBI) paid.
- information about other mortgages or loans that a buyer may have.
- buyer’s credit history.
- all property deeds that a buyer may have.
- information about the current assets (mutual fund statements, bank statements for the last 6 months from tha country of a permanent residence and etc.).
- proof of non-residency.
All the documents should be in English or translated into Spanish by a local official translator assigned by the Spanish Ministry of Foreign Affairs.
It takes approximately 1-2 months for banks to process a mortgage application.
Obtaining a mortgage to buy a property in Spain will incur the following costs:
- property valuation fee: before giving a mortgage a spanish bank will require a property to be valued by one of their own appointed appraisers.
- mortgage opening fee: 1%-2% of the mortgage amount.
- mortgage insurance: it is a legal requirement to obtain general house and contents insurance. Additionally some banks can require a borrower to contract a life insurance.
- stamp duty (AJD – actos jurídicos documentados) – 1.8% of the mortgage amount.
- mortgage early cancellation fee: its percentage varies between the banks.
- mortgage notary and register fee: approximately 0.5%-1% of the mortgage amount.