More and more foreign citizens buy real estate in Spain. Only last year the number of mortgage-related financial operations has reached more than 60.000 – the highest figure in history of the country. So, with the foreign interest in Spanish real estate growing every year, it becomes quite logical to know whether the buyer’s nationality has any impact on obtaining the mortgage.
The answer is yes. The bank takes into account the nationality of a potential buyer in order to determine more flexible or restricted regulations. For example, to the Spanish citizens living outside their country apply the same rules as for the residents. However, the foreigners living in Spain are influenced by lots of aspects, like their country of origin (the so-called “rich” countries – Canada, the EU, etc. - have more benefits than the less developed ones), other relatives residing in Spain and so on.
Moreover, banks need to make sure the money their non-resident clients provide come from legal activities. This is the trickiest part, as many times it becomes very challenging to check and track the non-resident client’s income, that is why some banks don’t cooperate with foreigners. In such cases it becomes risky to approve a mortgage as sometimes the only guarantee for paying it is the proper real estate the client wishes to buy.
So, the main obstacle foreign citizens that wish to obtain mortgage may encounter is the actual amount of money the Spanish banks can offer. For the Spanish citizens it is usually around 80%, so for the majority of foreigners it is around 70-60% and even less. Once the mortgage requirements are fulfilled, the rest of process goes on regardless of the nationality.
The basic requirements are the following: to have saved 20% of the value of the home and another 10% to meet the expenses, and that the monthly payment does not exceed 35% of the income. Once this is settled, it is time to choose between a fixed and a variable rate. Which is the best? We’ll give you some hints.
In fixed mortgages, a fixed interest rate is established during the entire loan, from the first to the last assessment. In some cases, it may be negotiable if the client commits to some trade-off with the bank, such as contracting insurance, directing the payroll, and so on.
In order to calculate the interest rate for a variable mortgage, the Euribor is taken as reference, to which a differential is added.
So, while applying for a mortgage for buying your dream home in Spain, take into account the possible difficulties that may await you during the process. Knowing the rules of the game may save your time and money. Forewarned is forearmed!
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The Euro Interbank Offered Rate (Euribor) is a daily reference rate, published by the European Money Markets Institute, based on the averaged interest rates at which Eurozonebanks offer to lend unsecured funds to other banks in the euro wholesale money market (or interbank market).
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