Mortgage for property purchase in Spain
Financing Your Property Purchase in Spain: A Guide for Nordic Buyers
Financing a property purchase in Spain is a significant consideration for many foreign buyers. The process depends on various factors, including whether you are a resident or non-resident, your financial situation, the bank's assessment of your repayment ability, and current interest rates. Here, we break down the most common financing options and share essential tips to make your purchase as smooth as possible.
1. Resident or Non-Resident in Spain?
One of the first factors affecting your loan options is whether you are a resident (tax resident in Spain) or a non-resident. Typically, a resident can borrow up to 80% of the purchase price or the bank’s valuation of the property, while non-residents are generally allowed to borrow up to 70% of the same amount. However, remember that these percentages apply to the lower of the bank’s valuation or the purchase price – you can’t base your loan on a higher amount if the bank’s valuation is lower than the purchase price.
2. Financing Through Equity Release on Your Home
Many foreign buyers choose to release equity from their existing home to help finance their purchase in Spain. The advantage here is often a lower interest rate and an established banking relationship. This can be particularly attractive for those who want a predictable interest level and don’t need the entire loan amount in Spain. Many also combine this financing method with a Spanish bank loan.
3. Interest Rates and Repayment Terms in Spain
In Spain, both fixed and variable interest rates are available. It’s important to compare offers from multiple banks, as fees can vary significantly. Another general rule in Spain is that loans must be repaid by the age of 75. For example, if you are 60 years old when taking the loan, you will likely have a repayment period of 15 years, which is important to keep in mind to avoid high monthly costs.
4. Banks and Loans with English-Speaking Service
There is a wide selection of banks in Spain that offer various loan conditions and fees, which can differ greatly. For this reason, it’s wise to compare several banks and consider international options such as DNB and Nykredit, which provide financing solutions for foreign customers. Here at HomenetSpain, we also have connections with several banks offering English-speaking service, allowing you to manage the entire loan process in your native language.
Remember the Additional Costs
In addition to the purchase price, you should also account for certain fees and costs associated with a property purchase in Spain, such as taxes and notary fees. These additional expenses usually add up to about 10-15% of the purchase price, so it’s important to consider these as they cannot be included in the loan amount.
Financing a property purchase in Spain can seem complex, but with the right information and guidance, the process can be significantly easier.
Want to learn more about financing and how to purchase your dream property on Costa del Sol? Contact our local agents at HomenetSpain – we’re here to help you every step of the way! Click här!
