Financing in Spain
If you are not used to dealing with banks in Spain, it’s important to learn a few basic realities about the system here. Though the new European laws have already made banking very similar within all European countries, our clients do tell us about some significant differences.

As a non resident, we can arrange between 60% and 70% of the evaluation value of the property you want to buy. For residents, this percentage can go up to 80% of (under special circumstances) even higher. The most usual reference rate is the EURIBOR rate. At present, there are several banks offering mortgages from between Euribor + 0,75% and Euribor + 1,5%.

Most banks will charge a small fee for studying the credit, plus the evaluation cost of the property and an opening commission of between 0.25% and 1%.

The interesting part is that, if a property has a mortgage, and the buyer needs one, it’s normally possible to simply take the existing mortgage over, thereby saving time and money. In the same way, if you are the vendor, for this same reason, having a mortgage can be a sales advantage.

Another advantage about Spanish mortgages is that you can cancel them at any time, with little or no cost.

In any case, practically all real estate sales involve some kind of direct or indirect contact with one or more banks. Whether it’s because financing is needed, or a mortgage has to be cancelled or both.

People get mortgages for many different reasons, some of them worth thinking about. Of course, the most common are the people who want to buy a property, that costs more that the cash they have on had at that time. However, many people consider the low interest rates in Spain and stat thinking about other advantages, like staying liquid, diversifying risk, and, in the case of non residents, the fact that the Wealth Tax that one has to pay, is calculate on the net value, after subtracting the mortgage, which can mean an effective savings in taxes.

For the bank to be able to apply for a mortgage, the banks will ask you for the following documents:
1. Tax statements for the last 2 years, or the balance sheets for the last 2 years.
2. A letter of presentation from your bank at home. This letter must mention a long time banking relationship with you and recommend you as a client for a mortgage in Spain.
3. The bank may also ask for unofficial information in order to be able to get a clear idea about you.
4. The cost to obtain a mortgage will be around 2.5% of the amount of money you get. (Your solicitor will normally not charge you for helping you with this.)
5. Another interesting fact to bear in mind when thinking about a mortgage in Spain is that it will affect only the property in Spain used to guarantee the mortgage, and therefore, will not affect your properties back home.