Spain is generally regarded as being an expat friendly country, and indeed it is, but if you are not a permanent resident in Spain (and here is a guide explaining how you can become one) then obtaining a mortgage to purchase a property in the country can be tricky.
Tricky, but far from impossible. Whilst some lenders are not open to borrowers from overseas, others are more than happy to help foreigners finance property purchases. But, if you are an overseas buyer, or even a Spanish person living abroad, then you can expect to pay higher interest rates on your mortgage.
Typically, lenders prefer fixed rate mortgages so that the bank receives a steady income. A standard mortgage for a Spanish non-resident buying property in the country might be 2.5% interest over a 20-year period. The rates are higher in part because the banks have fewer guarantees, such as life insurance taken out with the same bank, or a salary being paid into another of the bank’s accounts every month.
Provided you can supply a credit approval document that is accepted by Spanish lenders, such as Experian in the UK, for example, then you are likely to be able to borrow perhaps as much as 80% of the value of a property (as a rule of thumb, however, 70% is a better maximum limit, and the larger your deposit, teh better chance of approval you will have). By European standards that is generous. In fact, it is not unheard of for Spanish lenders to be willing to lend up to 100% of the value of the property if the buyer is well known in the community or has family connections in Spain.
Typically, Spanish lenders prefer customers from the US or EU, but they generally welcome most buyers, with Chinese and Asian overseas buyers having significantly increased in recent years. Be warned that, according to Spanish law, if, or when, you do sell your property, you will have to pay 3% tax to the Spanish authorities.
Without further ado, here are 3 lenders to consider closely if you are an overseas resident thinking of securing a mortgage on a property. Further info can be also be found at ISM Mortgages.
Unión de Créditos Inmobiliarios
The UCI, as it is better known, is a union of Spanish lending banks, including BNP Paribas Spain, and Santander, and authorised by the bank of Spain.
UCI offers mortgages up to 70% loan to value for EU nationals and up to 50% for non EU nationals. UCI typically provides fixed rates from 3-10 years, which are competitive. Whilst there is no requirement to sign up for life insurance to secure a mortgage, UCI does insist that 5 years of buildings insurance is paid upon completion of sale.
There are limitations geographically and in terms of scope, but UCI is an option worth considering
Having recently taken over a number of smaller Spanish banks, as well as Lloyds bank in Spain, Sabadell continues to offer non-Spanish residents access to mortgage financing for Spanish properties.
Sabadell offers competitive rates as well as a premier product for high earners, but be warned. In order to obtain a mortgage with Sabadell, you will also be obliged to take out life insurance with the firm.
A strong name that has grown through an acquisition led strategy represents a promising option for overseas buyers.
Spain’s third largest bank overall, Caixa pro-actively court the higher end of the non-resident Spanish mortgage market. UK nationals can obtain up to 60% loan to value, or 50% for loans in excess of €1m.
Caixa tend to insist that borrowers are earning, or receive income in excess of €45k per annum. The bank offers a fixed rate for the first five years typically, followed by competitive rates marginally in excess of Euribor.
A package worth considering if you are a marginally higher earner, albeit eligibility could be an issue.