While most Spanish banks will lend money to people living overseas, complications can occur. Therefore, it’s imperative to understand your options to avoid any unpleasant surprises.
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Fixed-rate mortgage
As a non-resident property buyer you will pay higher interest rates than if you had residency. The typical option in this case is a fixed-rate mortgage at around 2.5% for 20 years. With a variable rate mortgage, between 1.1% and 1.25% is added to the Euribor index.
Spanish banks prefer to give fixed-rate mortgages to non-residents.
Spanish banks prefer to give fixed-rate mortgages to non-residents because the amount the buyer repays remains steady. Thereby offsetting any future risk and uncertainty. The maximum repayment period for non-residents is usually 20 years, which can be extended to up to 40 years.
How much will you be lent as a non-resident?
Typically a mortgage should not be more than 80% of the value of the property. However, Spanish residents are often able to borrow up to 100%. For non-residents this figure often falls to around 60%, because if you fail to make payments the bank’s only guarantee is the property.
Providing a credit rating
As a non-resident you will be required to provide a credit rating from your country of origin when applying for a Spanish mortgage.
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Translating documents
As well as translating any non-Spanish paperwork, some banks require the Hague Apostille. This is the legalisation of UK documents for international use.
Tax
Non-residents taking out a mortgage in Spain will be subject to the same legislation as residents, but will have to declare their Spanish property on their tax return at home. You should also be aware that you will have to pay a municipal tax, as well as 3% of the value to the Spanish Tax Office, when selling the property.
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EU members
You’ll be pleased to hear that Spanish banks prefer to lend money to buyers from the United states and the European Union.
