You have decided that you would like to start living in Spain and have already chosen a city. Now it is time to buy new property. Since we are talking about large sums, getting funding is critical. In this sense, you will not have any problems in Spain. The country offers great opportunities for foreigners to obtain mortgages. We will explain everything you need to know in this article.
CONTENT:
- How to obtain mortgage for real estate in Spain for a non-resident
- Mortgages for foreigners - key requirements
- Obtaining a visa after buying a house
- Mortgages in Spain
- Required documents to obtain mortgage in Spain
- Additional costs when applying for mortgage
- Property in Spain
HOW TO OBTAIN MORTGAGE FOR REAL ESTATE IN SPAIN FOR A NON-RESIDENT
To obtain mortgage in Spain for an expat, you need to follow these steps:
- Prepare and submit documents so that the bank can study your income and debts, as well as the taxes that you pay.
- Get a preliminary offer of a mortgage.
After the bank analyzes the documentation and your specific situation, it will make a loan offer.
- Open your bank account.
- Compare and accept the offer.
It is necessary to compare the first offer with other banks, trying to get the best conditions.
- Offer acceptance.
Ideally, you should be careful and calm about choosing the best possible alternative. Keep in mind that you will have to repay this loan for probably over 20 years. Thus, take your time making a decision.
- Mortgage completion.
- Finally, sign the mortgage. You will need to contact a notary public to complete the process. There is also the option of empowering a lawyer.
Before getting a mortgage, banks require insurance against fires and other emergencies.
MORTGAGE FOR FOREIGNERS - KEY REQUIREMENTS
Mortgage registration features in Spain for non-residents are in the following provisions.
How much can you get on a mortgage?
As a rule, banks provide non-residents with up to 60-70% of the property value. However, if you can prove that you have lived and paid taxes in Spain (for at least 2 years), you can get 80% of the funding. There is a special situation when you can get 100%: when buying collateral from a bank.
What is a standard interest rate?
The answer will depend on your buyer profile (how solvent you are in the eyes of the bank).
For example, the Spanish system is much simpler than the UK mortgage system.
Here we mainly find fixed or variable type mortgages. Fixed loans offer an interest rate of 2-4%, while the variables depend on the Euribor and the buyer's profile (this is a compound rate).
How much money should you invest to buy an apartment in Spain (excluding mortgages)?
To find out this amount, you must keep the following points in mind:
The cost of ownership is 100% for our calculation.
You should also consider the additional costs when buying a house in Spain. This will vary from region to region, but for simplicity we will use an average of 15%. This is the percentage you can expect in Barcelona or Valencia.
As we have already mentioned, the bank will give you 70% of the property value. Remember that percentage is usually not applied to the selling price, but to the value of the property.
Thus, you will need to have 45-50% of the total amount on the account today (100% + 15% - 70%). The amount you will have to pay (without any credit).
How many years can I get a mortgage as an expat?
The time frame is usually from 5 to 40 years. If you are a non-resident, then the range is set for 5-20 years, for residents it is usually 20-30 years.
In addition, there may be additional restrictions. Terms and conditions will vary from bank to bank, but it is usually difficult to find mortgages that allow you to complete repayments after you are over 75 years old. The deadlines require that they be completed earlier.
How to get the best mortgage conditions as a foreigner
This is an ideal strategy to get the best conditions for foreigners:
- Become an ideal client for a bank. This is achieved by demonstrating solvency. Banks decide whether to grant a mortgage or not and on what terms according to your payment profile. If you can prove that you can pay off without any problems, the terms of the mortgage will be much more favorable for you.
- Create stable income sources. Lenders calculate a third of your salary and add your monthly mortgage payment to it. This total must be less than 35% of monthly income in order to appear solvent.
- Banks prefer income sources to be based on monthly (safer) salary rather than self-employed income or dividends.
- If the mortgage you are applying for is only 60% of the total value of the property, the chances of getting higher rates are higher.
- Apply for a mortgage with a partner.
- Prepare in advance and do not wait until the last moment of the purchase process. Try to compare as many offers from banks as possible.
- Rely on real estate lawyers to find the best alternatives.
Obtaining a visa after buying a house
The visa allows a foreigner to reside in Spain for investment in the purchase of real estate.
Requirements for obtaining a visa:
- The visa must be submitted in person or through an accredited representative.
- The application must be submitted no later than 90 days before the expected date of travel.
- A residence permit allows you to live and work throughout the country.
Valid term of a visa:
- 365 days if the purchase has already been completed.
- 6 months, if the purchase has not yet been completed, but there is a preliminary contract with a performance guarantee.
Documentation to be submitted:
- National Visa Application.
- Passport photo.
- Passport or travel document.
- Identity proof confirming that your place of residence is within the jurisdiction of the Spanish Consulate in Los Angeles.
- Criminal record certificate.
- Documentation confirming the availability of sufficient financial resources for yourself and your family members during the residence period in Spain.
- Government insurance or private health insurance with an insurance company authorized to operate in Spain.
- A) If the purchase has been made:
- Property registration certification.
- If at the time of applying for a visa, the acquisition of real estate was in the process of registration in the Land Register, it will be enough to present a certificate, as well as documentation confirming the payment of the relevant taxes.
- The applicant must prove a real estate investment of EUR 500,000 without any fees or collateral.
- B) If the purchase has not yet been completed:
- A preliminary contract, together with a certificate of a financial institution in Spain, where it is established that the applicant has a bank deposit with the amount necessary for the acquisition, in accordance with the perfect contract, of the property or real estate indicated therein, including fees and taxes.
- The spouse and children accompanying the main applicant must submit an independent application for a residence visa for a family member of the buyer, accompanied by all the necessary documents: marriage certificate, legalized and translated.
MORTGAGE IN SPAIN
Spain is one of the best countries to buy real estate. Getting a mortgage in Spain has many advantages:
- No need to pay down payments.
- Now the bank assumes the following payments: registration fee, tax on documented legal acts, notary fees.
- Low interest rates.
- Interest rates in Spain are really low at the moment. In fact, they are at their lowest level in 30 years.
- The disadvantage lies in the amount funded. Banks are now much stricter in providing mortgages and because of this they finance only 60 to 70% of the property.
- Payment in the currency of your country.
- You can now make mortgage payments in euros or your country's currency.
- The exchange rate will be fixed for the entire maturity of the mortgage and will be equivalent to the one at the time of signing.
REQUIRED DOCUMENTS TO OBTAIN MORTGAGE IN SPAIN
General documentation to apply for a mortgage
When it comes to applying for a mortgage loan, the documents that are usually requested by banks to check economic solvency are as follows:
- Identification.
- Personal income tax.
- Receipts for other loans.
- Bank statements.
- Deposit agreement (only if you already have a signed contract with the seller).
- Employment certificate.
- Proof of other income.
- Extract from the land registry on registration of real estate ownership.
Documents required for a foreigner to obtain a mortgage in Spain:
- Copy of the passport.
- NIE, the basic identification number that you will need to buy property in Spain and perform any other legal procedures.
- Marriage certificate or marital agreement.
- Employment or income status. Providing the last 3 pay stubs and employment contract if you work for a company or income tax return.
- Tax return.
- Purchase agreement with the seller.
- Proof that all property taxes have been paid to date.
- Complete information about other loans you may have.
- A certificate confirming your current assets and debts.
- Copy of existing property rights (in Spain and any other country).
Please note that all of these documents must be in Spanish, legally translated or apostilled.
ADDITIONAL COSTS WHEN APPLYING FOR MORTGAGE
Additional costs for mortgage loans include:
- Notary: The notary must pay a loan processing fee ranging from 0.3% to 0.5% of the mortgage liability, plus the cost of the copies they issue to the client and the bank. The bank pays the fee and each party pays for their copy.
- Property Registration: The registrar is also required to pay the fees associated with mortgage registration, which are regulated and range from 0.1% to 0.3% of the mortgage liability. They are paid by the bank.
- The Services Bureau charges a fee of around 400 euros on average for registering an act with the Land Register and paying the related taxes. These costs are paid by the bank.
- Tax on documented legal acts: This is a well-known and controversial tax on mortgages. According to the autonomous community, it ranges from 0.5% to 1.5% of the mortgage liability. From November 2018 it is paid by the bank.
- Real estate appraisal is about 350 euros on average and is paid by the client.
PROPERTY IN SPAIN
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