Mortgage or Loan for a Property in Spain: How Does It Work for Foreigners?

Buying a property on the Costa Blanca South is a dream for many. Whether it’s a second home, an investment, or a permanent move, the question of a mortgage or loan for a property in Spain often arises. But how exactly does it work for foreigners? In this blog, we explain it step by step and share useful tips.

Mortgage and Loan Options for Foreigners

Spanish banks offer both mortgages and loans to non-residents. In most cases, banks finance between 60% and 70% of the purchase price (or the appraised value, whichever is lower). The term usually ranges from 15 to 25 years, with interest rates that have remained attractive in recent years compared to many other countries.

New Build vs. Existing Property

The process differs slightly when purchasing a new build compared to an existing property:

• New Build: Payments are often made in installments during the construction phase. The mortgage or loan only takes effect at the notarial transfer. This means you make interim payments from your own funds until the property is officially registered.
• Existing Property: The mortgage or loan can be arranged directly at the time of transfer. The process is often shorter because the property is ready for use.

Processing Time for a Mortgage or Loan Application

Applying for a mortgage or loan in Spain takes an average of 4 to 6 weeks. This depends on the bank, the completeness of the documents, and the appraisal. It is therefore important to start the application process in a timely manner, especially if you already have a property in mind.

Documents You Need to Provide

Spanish banks require extensive documentation, including:

• Valid passport or ID card
• NIE number (Número de Identificación de Extranjeros)
• Proof of income (payslips or accountant’s statement for self-employed individuals)
• Annual tax returns
• Bank statements from the last 3 to 6 months
• Overview of existing loans or financial obligations
• In some cases: proof of savings or investments

Important Considerations

Banks look at your debt-to-income ratio: generally, the mortgage or loan burden should not exceed 30-35% of your net monthly income. Additional costs are involved in the purchase, such as notary fees, registration costs, and taxes. Plan for approximately 12-14% on top of the purchase price. An appraisal (tasación) by an accredited institution is always required before the bank gives final approval.

Want to know more about the taxes and costs of buying a property in Spain? Read our detailed blog post.

How Can Lirice Real Estate Help?

At Lirice Real Estate, we understand that applying for a mortgage or loan in Spain can seem complex. Thanks to our local contacts with reliable banks and mortgage or loan advisors, we can guide you through the entire process. We ensure you are well-prepared, that all documents are submitted correctly, and that you receive a proposal tailored to your wishes and possibilities.

Curious about tips and tricks for your new life in Spain? Or do you want to know why Spain is ideal for Western Europeans? Read all about it in our article on the cost of living in Spain.

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Conclusion

Applying for a mortgage or loan in Spain as a foreigner is entirely possible but requires thorough preparation. The difference between new builds and existing properties affects the timing, and the correct documentation is essential for a smooth process. With the right guidance—such as what we offer at Lirice Real Estate—your dream of owning a property on the Costa Blanca South becomes much simpler to achieve.