We can help you arranging your mortgage so you can buy your home in Spain. ProCare Estates will guide you through the whole process from application until completion day.

Types of Spanish mortgages

Spain offers the usual types of mortgages, with additional expat-focused Spanish mortgages offered by international banks and Spanish banks.

The biggest difference between residential and non-residential loans is the maximum loan-to-value (LTV) that banks will allow. Residents can generally borrow up to 80% of the property’s assessed value whereas non-residents are limited to 60–70% LTV, depending on the mortgage type.

Documents to apply for a Spanish mortgage

Whether you go through a Spanish or an international mortgage lender, you will need – at a minimum – the following items:

  • NIE Number (social security number in Spain)
  • Proof of employment or income
  • A pre-agreement with the seller
  • Proof that the property tax is paid to date
  • Details of your current debts and mortgages
  • Copies of all your existing property deeds (in Spain and elsewhere)
  • Records of your current assets
  • Any prenuptial agreements (if applicable).

Once you submit your completed file to the bank and the underwriters have processed everything, the bank will make you a mortgage offer.

Taxes on Spanish property purchases and costs

If using a Spanish mortgage lender, you should allow up to 10-15% of the total purchase amount for various transaction costs.

Residential properties are subject to various Spanish taxes, which are all paid by the buyer. Transfer tax is up to 10% of the purchase price, depending on the property’s location. For example, transfer tax in Madrid is set at 6.1%, but in Catalonia and Valencia you’ll pay the highest rate of 10%.

Typical closing costs include transfer and stamp taxes (explained below), the bank’s arrangement fee and opening fee, a notary fee and registry fee, and a bank assessor’s fee. Property transfers in Spain are done through public deeds of purchase, which must be certified by a notary. The sale is not official until the notario signs using his firma protocolizada, for which fees apply. As soon as the notary certifies that all the documents are in order, the deed is ready for taxes.

Property Insurance in Spain

All Spanish residential property owners are legally obligated to have home insurance to cover the value of the property. Life insurance is not mandatory but many lenders require borrowers to take out life insurance policies sufficient to pay off the outstanding mortgage balance.

You may also want to consider getting mortgage insurance, which would protect you if you can’t make mortgage payments. Having an active life insurance policy and a mortgage insurance policy before applying for a mortgage may even provide access to better interest rates.