This article deals with how non-residents buying property in Spain can obtain a mortgage and the conditions under which Spanish banks give out mortgages to both foreigners and Spaniards whose address, for tax purposes, is in another country.
The documentation that banks require from non-resident citizens in order to evaluate the concession of a mortgage is specific to each country so we won't go into that here - the bank will certainly inform you once you've made the application.
Statistics indicate that the nationalities most likely to obtain a mortgage in Spain tend to be the British and the Germans, but many other, especially EU, nationalities also have a reasonable chance of getting a mortgage here.
Normally, the banks never concede a mortgage for more than 70% of the purchase price to a non-resident and it is quite common that they will limit the loan to as little as 50%, particularly in the case of non-EU residents.
This means that the foreign buyer needs to be able to come up with between 30% and 50% of the value of the property plus sufficient money to pay for the costs, which in Spain tend to be around 10% of the purchase price.
The reason why the banks are stricter with customers who live abroad is because, in the case of non-payment, it is practically impossible to seize foreign assets, so the only guarantee the bank has is the property that it has financed in Spain.
Although there is a remote possibility that the Spanish bank will accept scanned documentation by post, it will normally demand that all the original documents be presented in person, and will sometimes require documents to be signed before a notary.
One mustn't confuse mortgage loans made to non-residents with mortgages conceded to foreigners who are living here permanently and do have Spain as their place of residence for tax purposes. In this case, the conditions are exactly the same as they are for Spaniards who are obtaining a first or second residence.
The mortgages for non-residents depend on the fact that the customers pay their taxes outside Spain, not on their nationality.
1. Foreign buyers must have a NIE, which is a Número de Identificación de Extranjeros or Foreigner Identification number. This is necessary both to make the purchase and to open a bank account in Spain and can be obtained from the Spanish consulate or embassy in your country of origin.
2. You must have a Spanish bank account out of which you can pay all costs generated by the property as well as the associated taxes. A bank account in Spain must be opened in person.
3. The relevant tax is the Impuesto de la Renta de no Residentes or Income Tax for Non-Residents, which is a tax on all income generated by non-residents while they are in Spain. If you are in Spain for over 183 days a year, you will be required to pay IRPF like all Spaniards.
1. You will need to have savings amounting to between 30% and 50% of the property you intend to buy. This will depend on the bank where you are applying for the mortgage and also the financial status of the customer, including type of work, age and annual income. The higher requirements are due to the higher risk incurred by banks with non-resident customers as if they fail to make the payments it is virtually impossible for the bank to seize assets in their country of origin.
2. You will also have to pay for the costs associated with the deeds of sale and the mortgage, which together could quite possible be as much as 16% of the total value of the property.
3. The monthly mortgage repayment quota cannot be more than 40% of the income of the customer and any mortgages paid in the country of origin will be included in this calculation. The bank will expect you to be able to show proof of your regular income, by the way.
4. All the documentation must be translated by a sworn translator, although it is becoming increasingly common for banks to be able to offer the services of their own translation department and so avoid the extra costs.
If you are a foreigner who is resident in Spain, you may be interested in reading this article on the general requirements for getting a mortgage in Spain.
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