Financing a property purchase in Spain as a non-resident

Spanish banks draw a clear line between tax-resident and non-resident borrowers. For a non-resident, the loan-to-value ratio (LTV) is usually between 60% and 70% of the assessed value, meaning the lower of the purchase price stated in the reservation contract and the bank's valuation (tasación). A personal contribution of 30-40% of the price should therefore be expected, on top of acquisition costs of roughly 10-13%.

Loan terms tend to be shorter than for residents: 15 to 20 years, rarely beyond 25, and the final instalment must fall before an age limit set by the bank, often between 70 and 75 at the end of the loan. The debt-to-income ratio (monthly instalment against net income, including all existing credit) generally should not exceed 30-35%, calculated on household income in the country of tax residence.

Two main structures coexist: fixed rate, guaranteed for the whole term, and variable rate, indexed to Euribor (typically the 12-month rate) plus a margin (differencial). Non-residents are usually offered higher margins than residents, and fixed rates carry an additional risk premium. The actual rate depends heavily on the borrower's profile (income, deposit, employment history) and is negotiable.

Spanish banks also apply rate discounts (bonificación): the headline rate drops if the borrower takes out bundled products (life insurance, home insurance, sometimes unemployment insurance, and direct debit of income or bills through a local account). It is worth comparing the total cost with and without these products, since some add little real value for a non-resident.

The base file is common to all borrowers: valid passport, NIE (foreigner identification number), proof of address, bank statements for the last three to six months, and a summary of existing debt (ongoing loans, guarantees). The income documentation, however, differs significantly depending on employment status.

The process starts with an agreement in principle (pre-approval), issued after a preliminary review of the borrower's profile and income, usually within one to two weeks. Next comes the property valuation (tasación), carried out by a company authorised by the Bank of Spain, which determines the final loan amount; it takes one to three weeks and its cost is borne by the borrower.

Once the file is approved, the bank issues the FEIN (Ficha Europea de Información Normalizada) and the FIPER, pre-contractual documents detailing the rate, instalments, costs and conditions. A statutory cooling-off period of at least 10 days runs from their receipt, before a mandatory appointment with an independent notary who checks that the borrower understands the contract. The loan deed is then signed the same day as, or just before, the signing of the escritura (title deed) before the notary. Overall, from agreement in principle to signing, the process typically takes 6 to 10 weeks.

Since the mortgage law reform that took effect in 2019, the stamp duty (AJD) linked to the creation of the mortgage is borne by the bank, along with the notary fees for the loan deed and the registration of the mortgage in the land registry. The borrower still bears the cost of the valuation (tasación, roughly €300-600 depending on the property value), any arrangement fee (comisión de apertura, increasingly rare at major banks) and the cost of any bundled insurance taken out.

Offers should be compared on the APR (TAE), which factors in all these costs, rather than on the nominal rate alone.

Several options make it possible to avoid or complement a Spanish mortgage. Financing in the home country is often the most advantageous route: refinancing or a top-up mortgage on the main residence in France or Belgium generally comes with lower rates and more flexible conditions than the Spanish market, provided the bank agrees to finance a property located abroad.

Buying in cash followed by refinancing (a cash purchase, then setting up a mortgage afterwards to release liquidity) is common practice for prestige properties, particularly when the sale timeline is tight and incompatible with a standard mortgage process. Finally, a lombard loan, secured against a portfolio of securities or financial assets rather than the property itself, offers fast execution and avoids registering a mortgage, but exposes the borrower to a margin call if markets fall.

In all cases, it is advisable to approach several banks in parallel (at least two to three Spanish institutions and, where relevant, the bank in the country of residence), compare offers on the overall APR, and negotiate the margin and bundled products before signing any agreement in principle.