Non Residential Mortgages in Spain. Important things to remember.

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:

• passport.
• 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.
If the property buyer is from Germany, we recommend to get the list of documents and requirements here in the article for Obtaining Mortgage for Germans (Hypothek für Immobilie).

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.