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Mortgages in Spain - A Better Deal for A Foreigner Or A Spanish National?

Mar 9, 2008
As banks compete for new business, an interesting fact emerges with regard to mortgages on purchasing property in Spain. Do banks offer better deals to a foreigner or to a national of Spain? One would naturally think that the Spanish national would get the better offer but in fact this is not always true. It pays to shop around as some banks offer little extras to non-residents in the hope of getting a foothold in this ever increasing lucrative market.

Some of these perks include 'interest only' options, extra long payment terms, mortgage valuation on dual properties and current account bank interest. All in all, it pays to shop around. Think of the possibilities that our current multi cultural society throws up. A couple, one Spaniard and one say British, are looking for a property. One looks at a Spanish website and gets information on finance, the other browses an English speaking site and gets the same but lets say slightly differing advice, based on nationality and residence. A scenario that is more prevalent than one would expect nowadays so if you happen to have dual partnership, for whatever reason, then have a good look around, you maybe pleasantly surprised.

Securing a mortgage for a property in Spain is a fairly simple process. As more interest is generated in the Spanish property market, the process becomes even easier. A select few potential property buyers or investors have cash on hand to pay full asking price for a Spanish property on the market. For the vast majority however, securing a mortgage is the only available financing option.

One main appeal to securing a mortgage in Spain for foreign buyers is the interest rates. In Spain, interest rates on home mortgages are significantly lower than the UK. This fact alone generates a substantial amount of interest in becoming a Spanish mortgage holder. For this reason, competition between Spanish banks is fierce. Many pull out all the stops in order to obtain the business of foreign property buyers or investors.

Several different property types are available on the Spanish market. These include holiday apartments, luxury villas, Fincas and single family residential homes. Another viable option is to purchase 'off plan' properties. Here land has been secured and the property build is in the initial stages of development. Many builders of 'off plan' projects have gone one step further and secured mortgage financing with a local Spanish bank. In this instance, the buyer assumes ownership of the property and the current mortgage.

When looking to secure a Spanish mortgage, keep in mind that the first bank to make an offer is not necessarily the offer to accept. Receive copies of all the related documentation the bank provided in making its decision. Take this proposal information and visit several other mortgage institutions in the area. More often than not, that second bank will make a better offer than the first one. With two mortgage proposals in hand from separate institutions, you now have a bargaining chip to secure financing with either bank.

Be prepared to show documentation that you have the financial ability to meet the mortgage payments each month. For those employed outside the home, bring the last three months wage stubs and six months of personal bank statements. For those who are self employed, a little more documentation is needed to be considered for a mortgage. Bring the last three years business accounts with an auditor's stamp and the last year of business bank statements. In addition to this, you will also need to provide the last six months of personal bank statement information.

The most important piece of documentation to provide is the Numero de Identificacion para Extranjeros or NIE number. This is an official identification number used for residents and non-residents to engage in real estate property transactions in Spain.

Spanish financial institutions offer potential buyers and investors several attractive features in an effort to gain the mortgage business. These include low interest rates, favourable write off conditions, hassle free banking free of transaction charges favoured by international mortgage companies.

In order to secure the mortgage business of foreign buyers and investors, Spanish banks have added staff members fluent in several different languages to their payrolls. Other services include hassle free online banking and the ability to easily open a Spanish bank account. From this account, a foreign buyer or investor can pay all related property bills from their native home location as opposed to travelling to Spain and exchanging foreign currencies each time a bill is due.
About the Author
Dennis Collins, an eternal student and freelance writer, has lived and travelled abroad for 30 years and frequently writes on a variety of interesting and wide ranging issues. Find out more about purchasing a Javea property in the sun today.
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