What documents will the bank ask for?
The documents typically required by a bank are:
- Your DNI/NIE number. (You must get apply for a NIE number before you can buy a property in Spain.)
- Your contract of employment
- Your last 3 payslips
- Your latest income tax return
- Your pre-agreement with the seller
- Proof that the property tax (IBI) on the house is paid up
- Details of other mortgages or loans that you may have
- All property deeds, both in Spain and overseas
- Certificate from work authorities (vida laboral), showing your past work history
- Records of your current assets (bank/mutual fund statements, etc.)
- Prenuptial agreements, if any non-residents: A certificate of nonresidency (form available from the bank)
- If self-employed: Local tax on economic activities (IAE)
- If self-employed: Records of your assets during the last two years
- If self-employed: VAT tax you paid for the last quarter and last year
What are the main types of mortgage in Spain?
The vast majority are variable-rate mortgages, though you can also find fixed-rate and interest-only mortgages. In a variable-rate mortgage, repayments vary according to the Euribor, the base rate set by the European Central Bank. A typical bank offer might be “Euribor + .41%, with no opening fee, no cancellation fee, and a first-year fixed rate of 3.50%.
What is the typical length of a Spanish mortgage?
In the past lenders used to offer between 10-20 years. Now you can find 25 year mortgages or longer, depending on the lender.
How much can I borrow?
The lenders will decide this after reviewing your personal and financial profile. In general Spanish mortgage lenders give 60%-70% of the value of the property to foreign buyers of Spanish property. However, you may be able to find lenders offering up to 80%.
Are there additional costs when obtaining a Spanish mortgage?
Yes. These can be summarised as follows:
- Property Valuation Fee: Before granting a mortgage, a Spanish lender will require the property to be valued by one of their own appointed appraisers. The buyer is responsible for this fee.
- Mortgage Opening Fee: Many lenders charge a fixed fee of around 1% for setting up the mortgage.
- Mortgage Insurance: It is a legal requirement of Spanish mortgages that you obtain general house and contents insurance. Depending on your circumstances, you might also consider life and mortgage insurance.
- Mortgage Early Cancellation Fee: Buyers should be aware of this as it varies between lenders.
- Mortgage Notary Fee: If a Spanish house is to have a mortgage registered against it, this must be declared before a Notary. The Notary will charge for this.
- Spanish Stamp Duty: (known as AJD) is a tax on mortgages which is paid to the government. It is calculated as a percentage of the mortgage.
- Deed Arrangement Fee: The lender employs a gestoria to arrange for the deeds to be correctly registered at the Land Registry. The buyer is responsible for the gestoria’s fee.
- Land Registry Fee: Following completion the buyer will incur the land registry fee for completing the Registration.
The buyer should consider the above carefully when budgeting to purchase a property. The buyer should make sure they can get approved for a mortgage before putting a down payment on the property. Since 2007, banks are much more stringent as to who they will approve, especially to a foreigner without a regular payslip.