How to get a Mortgage as a Foreign Buyer
So you are not paying Spanish taxes but you want to get a mortgage to buy a property in Madrid
This can be overwhelming when you do not know your options, particularly as a foreigner. But there is good news: You can get a good mortgage from a Spanish bank if you are a non-resident foreigner.
We recommend, in most cases, to start by doing the two following things:
- Ask your local bank, if you have a long (and good) relationship with them, for a quote. If you own properties in the country of your bank, even better. Do not expect branches of your bank in Spain to help- in most of cases they are different entities.
- Ask the leading Spanish banks about mortgages for non-residents. Keep in mind that the best options are not the obvious ones.
The first challenge: get the paperwork
First, it’s important for the bank to know about you. We always recommend providing as much information as possible about your:
- Identity: Provide your passport.
- Income: Demonstrate how much you earn. Adequate proof of earnings include tax declarations from the country in which you pay taxes and pay stubs.
- Assets: Provide evidence of other properties you own, additional bank accounts in your name and returns from any financial assets you own. Adequate proof includes property deeds, bank statements and statements from your investment advisor or asset manager.
Any other financial information that shows you are a financially sound candidate is helpful. This includes profit and loss statements if you own a business, bank guarantees, etc.
If you are unsure of what documents the bank will accept, please schedule an appointment with us and we will answer any questions you may have.
What is a good mortgage rate for a non-resident?
As of 2017, the best non-resident mortgage rates available are:
- Variable rate: the minimum you’ll get is Euribor + 1.5%. Euribor is the Central Bank of Europe’s rate. As of October 28, 2017, the twelve month Euribor rate is -0.184%. Click here for current Euribor rates– they change daily. The standard offering for non-residents is Euribor + 2%.
- Fixed rate: 2.5 -3.5%.
To get these top rates, you need to demonstrate two things:
- A high quality profile. Specifically, banks look for high revenues and low risk.
- A commitment to the bank. Contract other products to the bank such as home insurance (which you will need anyway) or a car loan. Make sure you send a minimum amount to your account monthly, pay your bills from that account, etc. Remember: you will need a Spanish NIE to open an account. Click here to learn how to obtain a Spanish NIE. Some banks will even obtain one for you if you deposit a certain amount of money.
Remember, rates for non-resident are significantly higher than the standard resident mortgages you might see advertised. This is because you represent more of a risk, from the bank’s point of view. Since you are abroad the bank will have trouble re-coupinig their losses if you default.
How much will they lend me?
In general, non-residents will get a maximum of 50% of the property price financed by the bank. This means you need to put down a minimum down payment of 50%.
How do I get started?
It is a complicated matter. We recommend you first speak with your local bank to get an initial quote. Then, contact us at email@example.com. We provide you with the most current recommendations of the best Spanish banks with which to work. We also give you contacts who will attend to you in English.
Why is this so important? Because most banks don’t even answer emails. We did a test and sent ten emails in English, inquiring about non-resident mortgages. 80% of them did not receive a response.
Morever, many bank branches don’t even know how non-resident mortgages work. But don’t worry- we’re here to help!