Mortgages in Spain: Finance your purchase

If you want to purchase a property in Spain but you do not have sufficient funds or you prefer not to use up your savings, the solution may be to get financing from a credit institution.

Before choosing which type of mortgage you need and at which financial institution you wish to apply, you should be aware that, in Spain: there are banks and savings banks; fixed and variable interest mortgages; mortgages with interest-only conditions, in which you only pay interest for a certain period of time, without repaying the capital; flexible and fixed-rate mortgages. So, depending on your debt capacity and your requirements, you will be more interested in one kind or another.

The majority of the mortgages taken out in Spain are of a variable interest nature and take EURIBOR as their reference, which indicates the average interest rate at which European financial institutions lend money to each other. An additional margin is added to the Euribor, which usually ranges between 1 % and 4 %. The loan payments are usually reviewed on an annual basis and their amount will rise or fall, depending on the Euribor. Fixed-interest mortgages usually have a higher interest rate than variable-interest mortgages. Their main advantage is that they do not fluctuate with the market.

In order for the credit institution to approve your mortgage, you must provide documentary evidence that you are able to pay the monthly instalments. In general, the bank expects your global financial costs to not be higher than a certain percentage of your net income. The amount of the loan will ultimately depend on the evaluation of your property that the bank itself will carry out. Although during some moments of the real estate boom banks lent 100% of the appraised value, such practices are now a thing of the past and banks nowadays do not usually lend more than 80% to residents and rarely more than 70% to non-residents in Spain. The repayment term will almost exclusively depend on the age of the applicants, although some banks and financial institutions have limits to this respect. The terms normally range from 10 to 25 years for non resident citizens.

At Vicente & Otaolaurruchi we can negotiate with the different credit institutions on your behalf, to obtain a mortgage loan with the best conditions available on the market.