The essentials in a nutshell

Looking for a mortgage is the first step in your project.

Looking for a mortgage is the first step in your project to buy property in Spain.

You need to take care of this before you even start looking for apartments.

It would be a shame to look for a property to sell, to find a nugget, only to stress out when it comes time to make an offer to buy for fear of not getting a loan.

Especially in a country where no-credit clauses are very often refused by sellers.

Save yourself the hassle by validating your financing before you start your search, which will be much more comfortable for you.

In Spain, more than half of all property sales are made without recourse to bank financing. Sellers therefore have no reason to accept an offer with a no-credit clause.

Financing conditions

Be aware that you won't get the same financing terms if you're a Spanish tax resident, or a "non-resident", i.e. not a Spanish tax resident. Depending on your profile, what will be the bank conditions for your loan?

Spanish tax resident or non-resident?

Spanish tax resident: 70% to 80%.

If you are a Spanish tax resident, a bank will finance 70% to 80% of the property price if you are buying a second home or a rental investment. For a primary residence, this percentage will be 80% to 90% of the property price. The term of the loan will be 15 to 25 years, or even 30 years with certain (rare) banks such as UCI (Union de Créditos Inmobiliarios), which grant loans over this period. 

Non-resident: 60% to 70%.

If you are a non-resident, you can obtain a mortgage from a Spanish bank, or from a bank in your country of tax residence (under certain conditions). If you wish to take out a mortgage with a Spanish bank, the loan conditions will be as follows:

• Loan term: usually 15 to 20 years. You can also obtain a 30-year loan with the UCI bank (Únion de Créditos Inmobiliarios). Please note, however, that this bank will only grant you a loan over this period if you tell them you are buying a second home. If you're talking about a rental investment, they won't grant you a loan. There's nothing to stop you talking about a second home, even if you intend to rent the property out later.
• Financing: 60% to 70% of the purchase price.

Banks that finance property purchases in Spain

Terreta's practical advice

Are you actively looking for financing? If so, you're probably wondering which banks and finance brokers can finance your purchase in Spain.

If you have substantial real estate (or financial) assets in France, a French bank (or even a Belgian, Swiss or Luxembourg bank) may agree to finance the acquisition of a property in Spain, via a relocated guarantee or pledge of assets.

Here's a French broker who does this kind of business:

• ConnectCrédit

We also have Belgian customers, who have had their purchase in Spain financed by Banque de Luxembourg, using the same model of relocated mortgage guarantee (on a Belgian property).

Financing brokers free of charge for the customer (remunerated by the bank):

• Gibobs.com
• iAhorro.com
• Idealista Hipotecas

Banks that regularly finance our customers:

• Banco Santander
• Targobank (write to 23116@targobank.es, for example)
• Sabadell
• BBVA
• Caixabank
• Bankinter
• Ibercaja
• HSBC
• CIC Iberbanco

And a little magic touch to end on a high note: the only bank that grants mortgages over 30 years (!) whereas other banks generally finance non-residents over 15 to 20 years:

• Banco UCI (subsidiary of BNP Paribas and Banco Santander)

Warning: with this bank, do not talk about investment! Talk about buying a "second home", or they'll close their doors.

Practical tip #2 from Terreta

It's better to talk about buying a second home than to say you're making a rental investment.

Some banks will refuse to finance an " investment" .

Even if they agree to grant you a loan, they won't offer you the same advantageous terms as if you were buying a second home: lower interest rates, shorter terms.

But there's no risk in talking about a second home, because once the mortgage has been granted, the banks won't check whether you're renting out the property in question.

Should you take out a mortgage in Spain, or look for financing in your country of tax residence?

It's possible to obtain a mortgage in your own country (subject to conditions)

It is possible to obtain a mortgage in your country of tax residence to finance your purchase in Spain. But this option is not open to everyone. In fact, this possibility will only be available to you if you have substantial financial or real estate assets. 

A bank in your own country will ask you to provide solid guarantees of your assets in your country of residence.

For example: a principal residence free of debt (or heavily repaid) on which a bank could place a displaced mortgage guarantee, or the pledging of a life insurance policy, or the pledging of other assets in your possession.

Why would a bank in your country finance a purchase in Spain only under these conditions?

A bank in your country of tax residence will not be able to issue a mortgage guarantee on a property located in Spain. 

It will therefore need guarantees located on national soil. These are known as "displaced guarantees".

How do mortgages work in Spain?

For Spanish tax residents, it's quite simple: 70% to 80% of the property price for the purchase of a second home or rental investment, and 80% to 90% for the purchase of a principal residence.

For non-residents, the rule is to obtain financing of 60% to 70% of the price of the property. Of these two options, the most common is 70%, which is good news. 

Foreign buyers, you can obtain a mortgage from a Spanish bank

Spanish banks grant mortgages to foreign buyers, whether they are expatriates in Spain and therefore Spanish tax residents, or Spanish tax non-residents.

There are a few exceptions: if you are a tax resident of a country outside the European Union, and your income is not denominated in euros, many Spanish banks will refuse to consider your application.

Finally, if you are a tax resident of a distant country (America, Africa, Asia, Middle East), many Spanish banks will simply not grant you a mortgage. 

You'll have to buy without using credit.

Time to obtain credit: 1 to 3 months

Our advice: contact banks before you start looking for a property, as it usually takes 2 to 3 months to obtain financing.

At the very least (but don't count on it), it takes 1 month. How long depends on the responsiveness of the banks' risk departments.

This will enable you to gather all the supporting documents, and pre-validate your file.

This is vital, because the search for financing is thelongest step in your buying process.

Move ahead quickly with your mortgage search, because in Spain most sellers refuse to accept "no credit" clauses.

So when you make an offer, it's final.

What happens if the loan is refused?

If you don't get your financing, you generally lose 10% of the value of the property, which you pay to the seller to reserve the property as a deposit or "Arras" in Spanish. 

Why? Because in most regions of Spain, the "no credit clause" is systematically refused by the seller.

You can always try to make an offer with this clause, but chances are your offer simply won't be looked at.

There can be no offer to purchase without the certainty of obtaining financing.

So follow our advice: start your search for financing as early as possible, even before you've found your future apartment. This will enable you to look for properties that suit your budget and your down payment.

What percentage of the property price does the bank finance?

Spanish banks will finance a greater or lesser percentage of the cost of your property purchase, depending on your country of residence for tax purposes.

The percentage of the property price financed by a Spanish bank will be as follows :

• 60% to 70% of the price of the property (or of the " tasación") for non-Spanish tax residents who are, however, tax residents of the European Union.
• 50% of the price of the property for non-residents whose income is not denominated in euros, or who are tax residents outside the European Union
• 70% to 80% for Spanish tax residents (including foreign expatriates in Spain) 

Finally, for Spanish tax residents only, there is another case: the purchase of a principal residence. In this case, a bank will finance 80% to 90% of the price of the property. 

The interest rate

The interest rate granted by Spanish banks is slightly higher for non-residents. 

The difference charged by banks to Spanish tax residents is around 1%.

If you'd like to find out what interest rates are currently being charged, head for Idealista's mortgage comparator. 

Terreta's advice on interest rates

Many investors become obsessed with the interest rate, even though the difference in monthly payment between a 1% higher or 1% lower rate is often very small.

Don't attach too much importance to the interest rate; put its weight into perspective, in a factual way.

To illustrate this, let's look at the difference between a loan at 4%, 5%, and 6%, over a 20-year term: 

• 100,000 at 4% interest over 20 years = €606 monthly payment
• 100,000 at 5% interest over 20 years = €660 monthly payment
• 100,000 € at 6% interest over 20 years = €716 monthly payment

In other words, a 1% difference in rate creates only a €50 difference in your monthly payment.

It's normal to look for the best rate, but don't obsess about it. 

To maximize your cash flow, it's better to obtain credit over a longer term than to lower your interest rate slightly. 

The proof is in the form of a new illustration: 

• 100,000 at 5% interest over 20 years = €660 monthly payment
• 100,000 at 5% interest over 30 years = €537 monthly payment 

In terms of cash flow, the most attractive option is to extend the term. 

Simulate with the HelpMyCash calculator.

Fixed or variable rate?

Spanish banks almost always offer both options, but some banks may stop offering fixed rates, and only offer variable rates. 

This is particularly the case during periods of sharp interest rate rises.

Credit period

The general rules are as follows:

• 15 to 20 years for non-residents
• 20 to 25 years for a Spanish tax resident
• 30 years with a bank we work with, including for non-residents

To obtain a 30-year loan, contact the UCI bank (Union de Créditos Inmobiliarios).

Please note: you must indicate that your project is the purchase of a second home. If you say it's a rental investment, they'll refuse to grant you a loan. 

Here's the trick: there's nothing to stop you saying you're buying a second home, and then using it as a rental investment. Banks don't come and check the destination of the property after the purchase.

Prepare your application

Preparing a solid file is essential to obtain a loan. Spanish banks consider a maximum debt ratio of 33%, unless you have a significant amount left to live on.

To find financing quickly and efficiently, it's important to gather all the necessary documents in advance.

Proof of origin of equity capital

• Personal contribution is a key factor

Since the bank will generally only finance 70% of the price of the property, your personal contribution should generally represent 50% of the total cost of the project.

You need to allow for 30% of the price of the property, as well as the notary's fees, real estate agent's fees, works and furniture if any.

All in all, it's wise to consider that your contribution will represent 50% of the total cost of the project.

As the amount of the contribution is significant, you should be aware that a Spanish bank or notary will ask you to justify the origin of these funds.

So be prepared to explain that it's your work-related savings, or an inheritance. Their aim is to combat money laundering.

Get your NIE

• The Foreign National Identification Number: an essential step

Holding an NIE is mandatory for many official procedures in Spain.

This is particularly important for buying property, but also for opening a Spanish bank account.

So if you haven't got your NIE yet, read our comprehensive guide to the subject, which will tell you how to obtain it, and at what cost.

Summary table: mortgages in Spain

Loan features	Spanish tax resident	Non-resident
Percentage of financing	Up to 80	Between 60 and 70
Type of interest rate	Variable or fixed	Variable or fixed
Borrowing rate	Market rates	Surcharge
Loan term	20 to 30 years (standard)	15 to 20 years (standard)Possibility 30 years (rare)
NIE number	Mandatory	Mandatory

Documents required for a loan application in Spain

List of documents - short version

The list of documents requested by Spanish banks includes :

• Proof of identity and family status.
• Proof of income and employment.
• Bank statements.
• Proof of property income, if applicable.
• Proof of address.
• Property assets.
• Details on personal contribution.
• Foreign Identification Number (NIE).

List of documents - original and detailed version

In Spanish, and in a more complete version, here are the documents that Spanish banks will ask you to provide when examining your file: 

• "NIE" = your Alien Identification Number(see our complete guide on the subject)
• "IRPF" or "Impuesto sobre la Renta de las Personas Físicas" = declarations of your annual income. If you are not a Spanish tax resident, the tax form from your country of tax residence. Many banks will ask you for the last 2 years.
• "IRNR" or "modelo 210" or "Impuestos pagados en España de este año por los alquileres recibidos" = declarations of your rental income in Spain, if you have any.
• "Contratos de alquiler de las viviendas en España" = rental contracts if you already have tenants in Spain.
• "Extracto 6 meses de la cuenta donde reciben los alquileres" = extract from your bank accounts over 6 months, where you receive rental income from the apartments you own in Spain.
• "Extracto bancario de 6 meses en el que se acrediten los ingresos" = bank statements for the last 6 months, for the account from which you receive your salary or income.
• "Informe de crédito en su país de origen" or "Credit report" = document issued by your country of residence for tax purposes, proving that you have no outstanding repayment incidents; in France, for example, these are the FCC (Fichier Central des Chèques) and FICP (Fichier national des Incidents de remboursement des Crédits aux Particuliers); how do you obtain the FICP and FCC? Go to the Banque de France website.
• "Contrato de alquiler de la vivienda y las dos últimas mensualidades pagadas" = rental contract for the home you rent as your principal residence (if tenant and not owner) and the last two rent receipts.
• "Contrato de arras de la vivienda que compran" = sales agreement for the home you are buying in Spain.
• "2 últimas declaraciones de la renta" = your last 2 income tax forms, in Spain (if you have any) and in your country of tax residence.
• "3 últimas nóminas y Contrato Laboral" = last 3 pay slips, and employment contract (if you're an employee).
• "Impuestos pagados (IVAs) (modelo 390 resumen)" = your company's annual tax forms, tax returns, income statements and annual balance sheets (if you're an entrepreneur).
• "Vida Laboral" = your CV (Curriculum Vitae) to demonstrate your professional background.
• "Último recibo prestamos" = latest receipts for your current credits.
• "Detalle de propiedades (Dirección, porcentaje de titularidad, valor estimado y si está libre de cargas o tiene hipoteca)" or "propiedades: descripción, valor aproximado, deuda, ingresos mensuales si los hubiera" = details of properties you already own: addresses, percentages of ownership (100% if you are the owner, 50% if, for example, you are a co-owner with your wife, husband, sister in equal shares), estimated value of the properties, and information on any outstanding mortgages attached to these properties. If these are rental investments, rental income from these properties.
• "nota simple" = if you already own a property in Spain, the "nota simple" of these properties. You can obtain them on the Registradores website. 
• "Detalles de las deudas: para qué son, por favor envíe el último reembolso mensual" = details of your debts: what are they, sending proof of the last monthly repayment, and why not the amortization table showing repayments made and those to come. 
• "Ahorros e inversiones: último extracto con su nombre y detalles del producto" = proof of your savings and investments: latest account statement with your name and product details, showing your savings and liquid assets. 

Example of a checklist of documents requested by Targobank

Not all banks require the same supporting documents. To get a concrete idea of what a bank asks for, here's the PDF that Targobank communicates with its French customers.

What is the interest rate in Spain?

Average rates observed: 2% to 6%.

Interest rates in Spain generally range from 2% to 6%, for terms of between 15 and 30 years, depending on the buyer's profile.

This is highly dependent on changes in interest rates, and the pricing policies adopted by banks throughout the year. It is not uncommon to see very different offers from different banks for the same buyer, in terms of both rate and term. 

So be sure to contact several banks to get the best rate.

Criteria taken into account by banks include country of residence for tax purposes, employment status (salaried or self-employed) and type of project (principal residence, second home or rental investment).

To find out about current interest rates, we recommend that you contact various banks to obtain loan offers. 

You can also consult the Idealista interest rate comparator(click here).

 

Average interest rate in December 2023: 4.22%.

Between 1991 and 2023, average interest rates on mortgages in Spain ranged from 1.50% to 17%. 

At the end of 2023, the average rate observed was 4.22%.

Chart showing interest rates on mortgages - 1991 to 2023

Rates have been rising since March 2022. If we put aside the 2013-2022 period when rates were historically low, current rates are back to the normal observed over the period from 2000 to 2013.