Contrary to popular belief that mortgages in Spain are not available if you are not resident and working in Spain, now you can finance your property purchase with a Spanish mortgage and what is even more important on very competitive rates. Here are some useful facts and figures of what is available to you as a non-resident in Spain.
70% mortgage for non-residents
In partnership with Mortgage Direct SL we can offer mortgages for non-residents buying holiday homes up to 70% of purchase price (or valuation if lower). For fiscal residents (those paying Spanish taxes), the maximum mortgage is up to 80%.
All lenders base their mortgage interest rates on the annual Euribor reference rate with a percentage margin added to this, for example, annual Euribor + 3%. We can actually offer mortgages with rates as low as annual Euribor + 1,5% for premium or 2.25% fixed, non-resident clients (please enquire to see if you would qualify), but typically, for other clients the rates will be a little higher than this but lower than the publicized rates or if you go direct to the banks.
Mortgage Direct has some control over rates that can be offered due to the relationship it has with several banks.
– Terms up to 30 years or age 75 if earlier
– With or without attaching life assurance
– Low redemption penalties
Mortgages for those in retirement
If you are over age 60 and in receipt of a pension, you can still have a mortgage in your own name, although the same criteria relating to the maximum level of debt-to-income will apply. It is also possible to use a guarantor such as a family member to secure your borrowing, which can also have potential inheritance tax benefits.
Interest-only is not currently available, apart from during the first couple of years with some construction mortgages. To keep the monthly repayments down, in the absence of interest-only mortgages, we recommend opting for the longest possible term. This actually gives more flexibility over the amount you repay every month.
It is possible to make overpayments as and when you can or pay off the mortgage in full. The penalties are 0,5% of the amount paid off (partial or full redemption) during the first 5 years and 0.25% thereafter. As an example, for every €10.000 paid off early, the maximum redemption penalty in Spain during the first 5 years is €50. After the first 5 years this reduces to €25.
Mortgages for high-net-worth clients
We can assist non-European Union (EU) nationals who are seeking residency in Spain via the ‘Golden visa’ legislation. To be eligible for a Golden visa, clients have to inject €500.000 cash (excluding fees and taxes) into a Spanish property purchase, which can be of several properties and invested over time. For those wishing to purchase more properties and limit their cash injection to €500.000, they can top-up with a Spanish mortgage. They can finance each property with a mortgage and still qualify for the Golden visa due to their cash injection of €500.000 in total.
If you are buying a property that the banks will class as commercial premises (offices, shops, hotels, B&Bs etc.), we can offer mortgages to suit your purposes. The mortgages available are generally 50% of the purchase price (or valuation if lower) and other conditions can vary from those available for properties that will be for personal use only.
We can offer mortgages to those wishing to build their own homes. In all cases, applicants must own the plot of land outright before any bank will lend for the construction works. With the best products, the banks will pay up to 50% of the cost of the plot as the first installment, but generally only once the works have started. It is necessary to have all paperwork ready at the start of the application process, which includes architect’s plans, building licenses and quotes from construction companies who will carry out the works. A specialist valuer will assess the value of the project as a whole and the banks will base their lending on the valuer’s assessment. Lending of between 60-70% of the cost of the entire project (including the price of the plot) is often possible.