Top tips for getting a Spanish mortgage
February 09, 2022
by Amir Poursamad
If you’re financing your property purchase with a loan, take note of the following tips to ensure a smooth and straight forward process.
- Weigh up pros and cons. As a non-resident, you’re unlikely to get a Spanish mortgage with terms as favourable as those for residents. Think carefully about whether a loan is financially worthwhile for you and consider the financial implications for you if (when) mortgage interest rates rise.
- Organise your Spanish mortgage well in advance. As is the case in any country, the sooner you start thinking about a mortgage application, the better. Planning ahead gives you time to shop around for the best deal and compare terms and conditions. Leaving it until later, on the other hand, may result in a less favourable loan for you.
Start your mortgage application at least two months before you plan to buy.
- Prepare your paperwork in advance. For your mortgage application, you’ll need to show proof of earnings, address and possibly, your loan record in your country of residence.
- Shop around. There’s intense competition among mortgage lenders in Spain so it makes sense to compare and contrast terms and conditions.
- Prepare yourself in Spain. To get a mortgage, you’ll need a NIE (foreigner’s tax number) and a Spanish bank account.
- Compare costs. When you’re looking at loan terms from different banks, be sure to ask who is responsible for the costs of the mortgage. Not all are the buyer’s responsibility, although some banks will charge for all of them.
- Beware of ‘floor clauses’. Mortgage contracts may contain ‘floor clauses’, also known as capped mortgages (clausula suelo in Spanish). These allow the bank to charge a minimum percentage interest rate even when rates are lower. While floor clauses are not illegal, they can be considered abusive, particularly when the bank has not informed the client of their existence. Take professional advice on this if necessary.
- Don’t commit yourself to a bank. Look carefully in the mortgage contract for a clause obliging you to stay with the bank for a certain period of time (in some cases, banks require you to stay with them for the entire duration of the loan). This may not be in your interests since it restricts your ability to change to a bank with better mortgage terms later on. Also, beware of clauses tying you to certain bank products, e.g. insurance policies.
- Consider using a broker. Using the services of a mortgage broker may save you valuable time and money since they do the shopping around and comparing for you. Make sure you choose a reputable broker with a proven track record and registered with the Spanish authorities.
- Think about the long-term implications. If you take out a Spanish mortgage, the usual term is 15 to 20 years. This is a long financial commitment.