Mortgages in Spain


Many things have changed in mortgage markets since the credit crunch and Spain is no different. Spanish banks are generally lending to foreign nationals but at a reduced loan to value (LTV) of between 60 – 70 %.

There is potentially finance deals above these levels by using a combination of products available but this must reviewed on a case by case basis and generally can be obtained by clients with previous experience with home ownership in Spain.

Currently Spanish banks are only able to provide Spanish mortgages on a capital repayment basis and generally over a 20 – 30 year term starting at 2.5% interest.

10-reasons-Spanish-Mortgage

*These figures must only be used as a guide and if you require a more specific idea on monthly cost please feel free to contact us 

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Why a Spanish Mortgage?

here are our top 10 reasons

1. If your liquid funds are in a currency other than Euro, you could fund part of the purchase by getting a Euro Mortgage therefore offsetting any currency fluctuations when it comes to sending funds to Span to cover deposit and costs.

2. You may feel that your cash budget doesn’t get you the property you really want so getting a Spanish mortgage can give you the right amount of cash so you can purchase your dream property in the location you desire.

3. If the property is for investment and you wish to receive a rental return, it is worth considering buying a better property in a more desirable location, as these types of properties are more likely to get you a better rental return on your investment.

4. Interest rates are very low at the moment, therefore our clients are taking advantage of these historic rates in order to make the most of their cash and using their liquidity for other important things or investments.

5. Raising mortgage finance against unencumbered Spanish properties is almost impossible and therefore Spanish properties are very illiquid, meaning that the property would normally have to be sold to release quick cash against it for any reason, apart from home improvements. There are specialised lenders which can do this type of lending but tend to be more expensive than the high street options who do not entertain this at all. We get many enquiries from old cash buyers desperate to release funds to sort issues out back home or invest in other projects or investments but come to realise that they should have bought with a mortgage in Spain and therefore not tying up their cash. It can take a long time to sell a property in Spain just like in any other country.  Property is not a very liquid asset like bonds and shares because it cannot be sold within minutes. It can take several months.

6. The debt is against the asset in the country where the asset is held i.e. Spain. This is a good idea mainly because if there was an issue in your home country, the lending would remain in Spain and it would be difficult for the Spanish lender to raise a concern in the country where you are resident.

7. Spanish banks will do their own legal due diligence against the property meaning that if the bank will not lend against the property, it probably isn’t worth buying and it may even have legal issues such as not being properly registered. This offers you, the buyer, an extra layer of security when you purchase.

8. Short term Spanish mortgages are available so you don’t have to be tied into a long term mortgage here. You can obtain a flexible mortgage meaning you can cancel the mortgage at any time without incurring heavy redemption penalties. A perfect example of this is if a client is expecting a lump sum in the near future (i.e. tax free pension lump sum or a sale of a property elsewhere or a bonus payment from your employer), the mortgage can be cancelled in full or part leaving no charge against the asset.

9. You may have the ability to purchase more than one Spanish property if you wish to create a small holiday letting portfolio here in Spain. Contact our team and we can advise you as the the best way to do this.

10. Age is not much of an issue as lenders in Spain are able to lend on pension income.