Mortgages in Spain for non-residents
Moving to Spain: how to finance the purchase of a property?
Many individual investors do not have enough cash to buy a house or apartment, so when planning a move to Spain it is worth considering a bank loan. In theory Polish banks could grant mortgages on property abroad, but in practice this is difficult. Polish banks are reluctant to take a foreign mortgage as security, because the value of the property is hard to assess and enforcing a claim would have to follow Spanish law.
That is why, before deciding to move to Spain, it is worth learning how to get a mortgage from Spanish banks.
What is the Spanish property market like?
Despite earlier forecasts, property prices did not fall in 2023. In attractive locations prices have even risen. The most sought-after regions are the Balearic Islands, the Alicante area and Málaga, where prices mostly rise. In 91% of 250 Spanish coastal municipalities prices went up, with the biggest rises in the Balearics, the Valencian Community and Andalusia. Past price movements do not determine what will happen in the future.
Can any Polish citizen apply for a loan from a Spanish bank?
Any Polish citizen, being a citizen of an EU member state, can apply for a mortgage in Spain. The rules differ depending on whether you are a resident or a non-resident. A person who plans to move to Spain and has a stable source of income in Poland or another country is treated as a non-resident. A resident is a person whose main source of income is in Spain, for example through an employment contract with a Spanish company.
As in Poland, Spanish banks check creditworthiness carefully, based on the documents provided, before granting a loan. Documents issued by Polish authorities should be translated into Spanish or English.
Every mortgage application is assessed individually.
What should you arrange before moving to Spain and applying for a mortgage?
Before choosing a property and starting to prepare your move, it is worth beginning with the N.I.E. number (Número de Identificación de Extranjeros). This foreigner's identification number is essential for buying property, taking out insurance, signing an employment contract or signing up for a phone or utility contract. You can get an N.I.E. in person at a police station or foreigners' office, or through an authorised legal representative. Before moving you can also apply for it at the Spanish embassy, although the waiting time may be longer.
Besides the N.I.E., it is worth opening an account with a Spanish bank, which you will need when buying. In Spain, running costs of a flat or house are paid automatically from your account by direct debit.
How does a Spanish bank assess your borrowing capacity?
The bank relies on the loan application and the financial documents attached to it. It also takes into account the region, the location of the property and its condition. If you have signed a reservation agreement with the owner, you should present it to the bank together with an extract from the land register. The property is valued by an appraiser who works with the bank, and the cost of the valuation, several hundred euros, is borne by the client. The bank will also consider your employment and family situation.
How much money do you need before moving abroad?
A foreign buyer's own contribution when buying property in Spain is usually 40% of the value. That is not the only cost of moving to Spain. You must allow for legal and notary fees, the loan fee and 10% VAT when buying a new-build house or apartment. In Spain the bank does not finance these additional costs as part of the loan.
So when calculating your costs, include all these additional charges, which can add up to around a dozen percent of the property value. More details in the article how much it costs to buy a property.
How does completion of the purchase work?
The main difference from the formalities in Poland is that the loan agreement is signed at the notary's office, not at the bank. An authorised bank employee takes part in signing the notarial deed.
The transaction itself also runs differently. In Spain the most common form of payment is a bank cheque drawn on the account of the client or of the law firm representing them. Transfers are used less often. You can also pay by transfer from an account in Poland or another country.
Is it worth taking out a mortgage in Spain?
Moving to Spain with children is one of the most important decisions in life. Leaving your home country, changing jobs, a new environment and a different culture can be stressful. That is why you need to analyse all the costs carefully and plan a reserve for unexpected expenses.
Because the situation changes quickly, it is hard to give exact mortgage interest rates in Spain, but they are usually lower than in Poland. For more expensive properties it is possible to negotiate the rate with the bank. It is worth using a local lawyer, who can help with the formalities of the loan and purchase and knows local regulations and business culture.
Although legal services are expensive in every country, a specialist's help can reduce the costs of moving to Spain.