Important information regarding the possibilities for taking out a loan or mortgage for new properties in Spain
Documents required by the Spanish banks for taking out a loan / mortgage
These are the documents that the bank needs. What we do for you is to inform you about what you need and we will put you in touch with the right person and bank.
The documents you need are: the tax return for the last tax year, all tax information so that the bank can see your total gross and net income.
The last 2 or 3 most recent payslips (or pension payments) and employer certificates (which indicate which type of employment contract you have).
A copy of your passport or Identity Card and credit information about debts.
The bank will also ask for an overview of your balance on accounts, savings accounts, savings funds, equity portfolios, etc. This is especially important for those who need a higher loan or mortgage, and if, for example, you have many savings funds etc. that you do not want to use. Usually copies of bank statements from the past three months are sufficient.
Obligations: information about amounts of unpaid debts and how much you pay in interest and repayments per month.
Housing: the banks want to know if you are renting a house or have your own property (and if so, an appraisal of your property), the costs of the rent and any obligations etc.
How much should you borrow?
Normally you can borrow 60-70 percent of the purchase price. You must keep in mind that you are not allowed to borrow taxes and surcharges. Therefore, you must pay approximately 40 percent in equity of the total amount (for example, if you have a 70% loan, you must have approximately 30 percent in equity). How much you can borrow depends largely on what you are buying, the type of property and where it is located. The repayment period is usually 20 years for a foreigner. Some banks have a 67-year limit on a mortgage loan, while others are slightly more generous at the moment. Most banks have now changed the age limit to 75 years.
If you are an entrepreneur or business owner:
- In Spain, the banks request the tax return and the accounting (profit and loss account and balance sheet) so that they can see the basis of your income. Preferably the last two years accounting and tax return.
- The Spanish banks want to see a broad basis, so that they get a picture of your net income (after taxes and fixed costs in your home country) and thus determine your payment capacity for a loan in Spain.
- There is no problem with borrowing money from a Spanish bank for a foreign company. It is very common for foreign companies to take out loans with Spanish banks. However, you can get a maximum of 50 percent in mortgage loans if you take out the loan as a company. Normally there is a shorter repayment plan for companies than for private individuals.
Loans and mortgages in Spain and other countries
Mortgages in Spain have a higher interest rate for those who do not have their taxable residence in Spain than for those who live in the country. If you currently have your taxable home in Spain, you can take out mortgages with an interest rate of Euribor plus 1.00 to 1.50%. However, if you do not have your taxable residence in Spain, the interest rate from Euribor plus 2.50 to 3.50% will fall.
With this in mind, and if you are considering taking out a loan or mortgage to buy a house in Spain, it is possible that a bank in your home country can offer you better interest rates than a Spanish bank. We therefore recommend that you ask which banks in your country approve mortgage loans for Spain.
Also keep in mind that most Spanish banks usually offer additional products, i.e. you must meet certain conditions in connection with variable rate mortgage loans, and in this way you can lower the interest on the loan. The bank may ask you to make monthly transfers to your account to maintain an average balance, or to use credit cards to obtain a certain amount, or to take out insurance, etc.
Start working with your bank
If you have already decided which bank you want to borrow from, we recommend that you request a loan quote before submitting all the necessary documents. That is, you submit a complete list of your income and loans, as well as your work situation and what loan amount you need.
The bank registers all this information and then informs you whether it can approve a loan on these grounds. If the bank checks your financial information and indicates that you cannot get a loan, you can always go to another bank. If the bank confirms that you can get a loan based on the information you provided, you must provide all documentation and an appraisal of the property that you want to buy.