How to manage your Spanish Mortgage as a non-resident

The non-resident Spanish mortgage market refers to the availability of mortgage loans for individuals who are not permanent residents of Spain but wish to purchase property in the country. Here are some key points to consider:

Eligibility and Documentation: Non-residents, which typically include foreigners who don’t hold a Spanish residence permit or contribute to the tax system, can apply for mortgages in Spain. Lenders may require additional documentation compared to residents, such as proof of income, employment, and creditworthiness from the applicant’s home country to assess the risk profile of that application.

Loan-to-Value Ratio (LTV): Spanish banks often offer lower LTV ratios for non-resident mortgages compared to residents. This means you might need to make a larger down payment, usually around 30-50% of the property’s value.

Interest Rates: Non-resident mortgage interest rates can be slightly higher than rates for residents. The exact rate depends on factors like the lender, the applicant’s credit history, the loan amount, and prevailing market conditions. Interest rates are constantly changing, please contact us for further information.

Loan Term: Non-resident mortgages generally come with shorter loan terms compared to resident mortgages. Terms might range from 15 to 25 years, depending on the lender and the applicant’s age.

Currency: Some banks might offer mortgages in foreign currencies, such as the applicant’s home currency. While this might offer benefits in terms of lower monthly payments in the short term, it also exposes borrowers to currency exchange rate risk.

Property Types: Non-resident mortgages are typically available for various property types, including residential homes, vacation properties, and investment properties. Rustic or rural properties are more complex to finance and extra due diligence on the property in question is normally required to be done by the lenders who are willing to lend on inland properties.

Documentation Required: Non-resident mortgage applicants usually need to provide documents like a valid passport, proof of income, bank statements, employment verification, and potentially additional documents from their home country. The specific requirements may vary among lenders.

Legal and Tax Implications: Non-residents need to consider legal and tax implications when purchasing property in Spain. This includes understanding property taxes, capital gains taxes, and any other relevant regulations. Please consult a suitable adviser regarding these matters.

Application Process: The mortgage application process for non-residents may take longer than for residents due to additional verification processes and paperwork. Remember that Spain does have one of the highest national and local holidays in Europe which can delay applications somewhat.

It’s crucial to conduct thorough research and seek advice from financial advisors or legal experts who specialize in international real estate transactions and the Spanish property market. Regulations, requirements, and market conditions can change, so consulting with professionals will help ensure that you’re making informed decisions based on the most up-to-date information.

Here at Marbella Dream Living we will assist you with these steps and any other real estate related issues.