Loans for these profiles generally finance a lower amount and with higher interest rates, since they carry more risk for banks.
Mortgages for foreigners living in Spain or Spaniards residing in another country have some differences from ordinary mortgages granted to Spanish citizens residing in Spain. For example, they can finance up to 70% of the property , against the 80% of ordinary loans, they tend to have higher interest rates and require a multitude of documents . However, this does not mean that these profiles cannot access bank financing to buy a house. We go over everything you need to know about it:
The importance of tax residency
When you buy a house and take out a mortgage in Spain, it does not matter whether you are Spanish or not. In fact, the most important thing to keep in mind is where your tax residency is. That is, where you pay most of your taxes.
If you have your tax residence in Spain, it is quite easy to access an ordinary mortgage. In contrast, if you have your tax residence in another country (either because you are a foreigner or because you are a Spanish expat who works and spends most of your life in another country), it will be more difficult to access ordinary loans, so you will have to apply for “ real estate loans for foreigners ” or “ real estate loans for non-residents ”.
These loans are offered by most Spanish banks and are characterized by the fact that they are designed for people whose tax residence is outside Spain, although it is much easier according to the legislation in force if the tax residence is in the euro zone .
Why are mortgages for foreigners and non-residents different?
The main reason is that in case of default, banks face more difficulties in activating concrete measures to recover the loan money. If the borrower’s tax residence is in another country, the bank has less (or slower and more bureaucratic) means to act against the borrower in the event of default. For this reason, this type of mortgage is considered a higher risk product than regular mortgages and therefore has a number of differences that are worth knowing.
Differences Between Resident and Non-Resident Mortgages
Each mortgage product for non-residents and each bank may have its own characteristics. However, in most cases, there are a number of common elements to these types of mortgages . These elements will affect the terms of repayment , the amount of the loan and the interest to be paid .
How much money do you get with a mortgage for foreigners?
An important difference to bear in mind is that in the case of mortgages for foreigners, the loan will generally not exceed 60-70% of the value of the property (in the case of ordinary mortgages this amount rises usually around 80%).
This means that, in order to be able to buy a house in Spain by accessing financing through one of these mortgages, you must have saved approximately 40 to 50% of the total price of the house in question (30 to 40% of the price that the bank does not finance and an additional 10% for the payment of the costs related to the purchase operation) .
How much interest is paid on a non-resident mortgage loan?
Since non-resident mortgages are meant to be for second homes, the interest usually paid on these mortgages is higher than for conventional mortgages.
Documentation for applying for a mortgage loan for foreigners
One of the most interesting aspects when applying for a mortgage loan for foreigners or non-residents is the documentation that we will need to carry out the process. The bank will ask you for the following documents:
- A photocopy of your NIE or passport.
- A certificate stating that you are not a resident.
- A copy of your employment contract.
- A copy of your latest payslips from your country of residence.
- A bank statement covering the last year for the account into which your salary is paid.
- A certificate of tax residence.
- A tax declaration.
- The last three receipts for the cancellation of your unpaid debts.
- The purchase contract for the property you are going to buy (or the deposit contract if you do not yet have a purchase contract).
- In many cases, you will be asked to translate this documentation, it will depend on the entity and the language in which the documentation is located.
How to apply for a mortgage as a foreigner but with residence in Spain?
As we mentioned above, the difference when applying for a mortgage for foreigners in Spain compared to a regular mortgage depends directly on the place of tax residence , and not so much on the nationality of the applicant.
Therefore, if you are a foreigner, but have your tax residence in Spain, the way to access a mortgage loan is the same as for any national resident . That is to say, you can apply for a regular mortgage at the bank of your choice. In any case, and just like looking for a classic loan, it is important to compare mortgages to find the product that best suits your needs and preferences as a customer.