06 Jul Housing loans
As a resident or non-resident, you can finance your purchase of a home on the Costa del Sol with the help of a bank loan from a Spanish bank. With security in the form of a mortgage in the Spanish residence.
It is entirely possible to borrow money for property purchases from a Spanish bank, whether you are a resident or not. If you choose to finance the deal with a bank loan in your home country, the security for the loan must be your property or other real security in your country. If you choose to finance part of the purchase with a mortgage loan in Spain, it is required that your Spanish home be put up as collateral for the loan. You can never mortgage a property that is not located in Spain.
Loans for non-residents
When buying a house for those who have the home as a holiday home, it is normal to borrow between 60-70 percent of the bank’s valuation of the house. Note that this percentage is on the lowest value of the selling price and the bank’s valuation. You must prove your income with the latest income tax return, your debts and assets in your home country. The repayment period is a maximum of 25 years, depending on the borrower’s age. Spanish banks have an upper limit for the borrower of 75 years for the repayment of the loan. This means that a person who is 60 years old and applies for a home loan gets a 15-year amortization period.
Loans for residents
If you are permanently resident in Spain and have a residence, you can borrow up to 70 percent of the valuation if you have regular income. Mortgage loans, prenominas hipotecarios, are usually characterized by the fact that the banks offer a very low interest rate in the first year. Really find out what the loan interest is for the remaining years! Also, be sure to review the setup fees, which vary quite a bit from bank to bank.
Fixed or floating interest rate?
You can choose between fixed and variable interest for the entire loan period or mix, for example, fixed for the first half and then variable interest.
To apply for a loan in a Spanish bank, you need the following documentation:
- Passport
- The most recent income declaration and tax notice + the three most recent salary statements
- If self-employed: financial statements
- Provide information on other properties (market value) and loans (remaining amount and monthly payments)
- Credit information
- Account statement showing any loans and monthly payments
- Account statements where any savings, investments, pension funds are visible
Spanish banks with English speaking staff
If you do not plan to learn Spanish or feel that you have problems with the language at Spanish banks, there is a solution to that. Ask your broker and they will tell you about the banks along the Costa del Sol that have English speaking staff depending on where your property is located.
