If you are considering buying a property in Spain and are not a resident, it’s important to understand the key aspects related to obtaining a mortgage. While the process for non-residents is similar to that of residents, there are some differences and specific requirements that you should be aware of. In this article, we will explain everything you need to know about obtaining a mortgage in Spain as a non-resident, including conditions, requirements, and the application process.

Can I get a mortgage in Spain if I am not a resident?

Yes, as a non-resident in Spain, you can apply for a mortgage to purchase property in the country.

A non-resident mortgage is a loan that Spanish banks offer to foreign citizens who do not live permanently in Spain but wish to acquire property there. Spanish banks offer mortgages to both residents and non-residents, although the conditions may vary slightly between the two groups. Non-resident mortgages tend to have slightly more restrictive terms, as banks perceive a higher risk in lending to individuals who do not live permanently in Spain.

What conditions apply to non-resident mortgages?

In general, the conditions for non-residents are somewhat different from those for residents. Here are the most important ones:

1. Financing percentage: While residents can obtain up to 80% of the property’s appraised value, non-residents typically receive between 60% and 70% of the appraised value or the purchase price, whichever is lower. This means you will need to provide between 30% and 40% of the property’s price as a down payment.
2. Repayment terms: The repayment periods are usually shorter for non-residents. Generally, banks offer terms of between 20 and 25 years, instead of the 30 years available to residents.
3. Interest rates: Non-residents usually face slightly higher interest rates than residents due to the greater risk banks assume. Rates can be fixed or variable, depending on the bank and the applicant’s financial profile.
4. Additional guarantees: Some banks may require additional guarantees, such as guarantors or higher deposits, to reduce the risk associated with the transaction.

Requirements to apply for a mortgage in Spain as a non-resident

Spanish banks usually require several conditions to be met by non-residents applying for a mortgage in Spain. The main requirements include:

1. Identification document: You will need to provide a copy of your valid passport.
2. Foreigners’ Identification Number (NIE): To conduct any transaction in Spain, including applying for a mortgage, you will need to obtain an NIE, which is your tax identification number in the country.
3. Proof of income: It is essential to demonstrate that you have stable and sufficient income to repay the mortgage. Generally, you will need to provide:

1. • Your last three pay slips (if employed).
   • Recent tax returns or proof of income (if self-employed).
   • Recent bank statements showing your savings and financial situation.

4. Credit history: Spanish banks usually require a credit report from your home country to assess the applicant’s financial solvency and minimize risks.
5. Global debt: Banks will also evaluate your overall debt level. In general, your mortgage expenses should not exceed 30% or 35% of your monthly income.
6. Credit report: In some cases, you may be asked to provide a credit report from your country of residence to assess your financial solvency.
7. Life insurance: Some banks may require life insurance to cover risks associated with the mortgage loan.

Mortgage application process

The process of applying for a mortgage in Spain for non-residents involves several important steps. Here’s how it typically unfolds:

1. Search for a bank: The first thing you should do is research the different banks that offer mortgages for non-residents and compare their conditions. Interest rates, terms, and fees may vary, so it’s important to find the best offer for you.
2. Property appraisal: Once you have selected the property you wish to buy, the bank will carry out an appraisal to determine its actual value. This is crucial, as the mortgage amount will be based on this value.
3. Submitting the application: Once you have the required documentation, you must submit your application to the bank. At this point, the financial institution will analyze your financial profile, the property appraisal, and your guarantees to determine whether to grant you the mortgage.
4. Approval and signing of the loan: If your application is approved, the bank will issue a binding offer detailing all the mortgage conditions. After accepting it, the mortgage loan contract will be signed before a notary, along with the property purchase deed.

Taxes and expenses related to buying property

As a non-resident buyer, it is important to be aware of the tax obligations related to property ownership in Spain:

1. Property Transfer Tax (ITP) or VAT: When purchasing second-hand properties, the Property Transfer Tax (ITP) is payable, which ranges from 6% to 10%, depending on the region. If you are buying a new property, VAT is applied, generally at 10% of the property value.
2. Impuesto de bienes inmuebles (IBI): This is a municipal tax that all property owners, both residents and non-residents, must pay annually. The IBI is calculated based on the property’s cadastral value, and the rates vary by municipality. It’s important to include this expense in your annual property budget, as it can vary considerably depending on the location.
3. Non-Resident Income Tax (IRNR): Non-residents who acquire property in Spain are subject to the IRNR. If you don’t rent the property, you will need to pay a percentage of the cadastral value as “imputed income.” If you rent the property, you will be taxed on the income earned.
4. Notary and registration fees: Notary and property registration fees can represent between 1% and 2% of the property’s value.
5. Bank fees: Banks may also charge you fees for opening the loan, which typically range from 0.5% to 1% of the total mortgage amount.

What happens if I cannot pay the mortgage?

It’s important to note that if at any point you cannot meet your mortgage payments, the bank has the right to initiate foreclosure proceedings. This means that the bank can take possession of the property and sell it to recover the loan amount.

If the sale of the property does not cover the total debt, you may still be required to pay the difference, as in Spain, the mortgage debt is not canceled with the handover of the property unless a “dación en pago” (debt settlement by handing over the property) is agreed. Therefore, it is crucial to assess your ability to pay before committing to a mortgage in the country.

In conclusion, obtaining a mortgage in Spain as a non-resident is entirely possible, but it is essential to understand the specific conditions that apply to your situation. You will need to meet additional requirements and contribute a higher percentage of the property’s value, but with the right information and careful planning, you can finance the purchase of your property in Spain. If you are considering buying a property, we recommend seeking advice from professionals specialized in the mortgage process to ensure that everything is done correctly and in compliance with the current regulations.