Ultimate Guide to Spanish Mortgages for Global Buyers: Navigating the Process as a Non-Resident

21 November, 2023 | Antonio Beltrán

This article is for all those who live outside Spain and are considering buying a property or living in Spain, but do not have your tax domicile in Spain.

Let’s look at the steps you need to follow if you are not a fiscal resident in Spain and require a mortgage because you wish to buy a property.

The first step will be obtaining the NIE (Foreigner’s Identity Number): although it is not essential to start proceedings with financial institutions, we will need it to formalize any document, so it is advisable to start working on obtaining it as the first step. How? The most recommended way is to make an appointment online at the Electronic Office of Public Administrations.

What documentation will I need to obtain the NIE?

• The EX18 form filled out in Spanish and in duplicate, which can be downloaded for printing from here.
• Original and photocopy of the document that justifies the purpose of obtaining the NIE: employment contract, investment, property acquisition, etc.
• Original and photocopy of the passport plus 2 passport-size photos. If the applicant is not a resident of the EU, they must also provide their visa, boarding pass, or another document that verifies their entry into Spain.
• Pay the corresponding fee of €10.71 for obtaining the NIE.
• Fill out this form and make the payment at any bank.

It is very important to bring all the necessary documentation and have the fees paid on the day of the face-to-face appointment, otherwise, we will have to make another appointment.

Once we obtain the NIE (which usually takes between two and four months),

What documentation will we need to process a mortgage?

Spanish banking entities require the following documentation to start processing a mortgage:

• Photocopy of the NIE, passport, or non-resident certificate.
• Record of assets held in the country of residence (bank balances, properties).
• Last year’s tax return.
• Employment contract and the last three pay slips from the country of residence.
• Bank statement of the account where the salary is deposited or similar for the last 6 months.
• Last 3 receipts of loans and similar: credit cards, personal loans, etc.
• Fiscal residence certificate.
• Draft and submit a deposit contract, in which an amount is paid towards the property you wish to acquire.
• Open a bank account in Spain: although it is not essential to do it immediately, it will greatly facilitate the process when making any deposit or payment.

What taxes does buying a house entail for a non-resident?

When buying a property in Spain, we must consider the following expenses:

• If you buy a new property, VAT (value-added tax) is 10% of its documented amount, except for officially protected housing in a special regime or public promotion, where the tax rate is 4%.
• If the property is second-hand, the tax to be paid will be the Transfer Tax (ITP). The amount of ITP varies depending on each Autonomous Community, with the Basque Country being the most economical region in Spain concerning this tax, with a 4% tax rate, and Catalonia or Valencia among the most expensive, with a 10%.
• Regarding the Tax on Documented Legal Acts (AJD), which previously had to be paid by the buyer in the mortgage deed, it has been the responsibility of the bank since a decree law came into force in November 2018. However, it remains the responsibility of the buyer exclusively in the deed of sale for new housing, where VAT + AJD is paid, with 1.5% being the highest tax rate in some autonomous communities.

Other expenses we must also face may include the simple note requested from the Property Registry, the appraisal of the property (€400-550), and the broker’s fees depending on the difficulty of obtaining the mortgage.

What taxes does owning a property in Spain entail?

• IBI: Property Tax is paid annually at the corresponding town hall, depending on the cadastral value of the property in question.
• Garbage collection fee.
• IRNR: Non-Resident Income Tax will be applied if the non-resident person obtains benefits from renting the property. The tax rate will be 19% or 24%, depending on the country of residence.
• Capital gains: if a resident obtains benefits from the sale of a property located in Spain, they must pay this tax at the corresponding town hall.
• Wealth Tax (only if you own assets worth more than €700,000).

Why won’t you be given a mortgage in Spain if you earn your salary in a certain currency?

Law 5/2019, of March 15, regulating real estate credit contracts, specifically restricts the granting of mortgages to those who earn their income in a currency other than the Euro.

Article 20 of the aforementioned Law includes the possibility for the mortgagee (debtor) to demand the bank, at any time during the duration of the mortgage, to change the currency to that of the state in which they reside or the currency in which they receive most of their income. This means that a resident in Brazil with a mortgage in Spain could legally request that the currency of their mortgage be changed from the Euro to the Brazilian Real, for example. This situation is complex for banks, as it involves assuming a lot of risk due to currency fluctuations, so this has led many banks to limit themselves to granting mortgages to residents of the Eurozone, or, failing that, to countries with stable and friendly monetary policies, such as the USA, UK, and some Scandinavian countries.

This can be a problem for many Spanish workers who work for multinationals in other countries, especially Africa, Asia, and Latin America, although, like almost every problem, it also has its solution, as we discuss below.

What is the fastest way for a non-resident to get a mortgage in Spain?

If we are really interested in acquiring a property in Spain as non-residents, the most effective way is, undoubtedly, through a Real Estate Credit Intermediary, or mortgage broker, as they are usually known. The figure of the mortgage broker is perfectly regulated and supervised by the Bank of Spain and are professionals who exclusively dedicate themselves to the management and processing of all types of mortgages.

A good mortgage broker is the perfect ally to search for and process a mortgage for non-residents, as by sending all the necessary documentation, they will screen the banks that best fit the profile of the applicant. It goes without saying that the operations of a good broker can and usually are online, thus facilitating the procedures to carry out all the formalities. In addition to guiding and advising us from start to finish in the entire process – including all the necessary documentation – they will provide us with the best mortgages for non-residents on the banking market, as being an independent professional, they conduct the most exhaustive search possible.

What are the conditions of a mortgage for non-residents?

Generally speaking, we can say that mortgages for non-residents usually do not exceed 70% of the appraisal value, with terms of up to 30 years. These values are for guidance only, as a good mortgage broker can achieve better conditions, as long as the applicant’s profile and solvency are appropriate.

Likewise, to avoid non-payment problems, banks do not grant mortgages whose monthly payment exceeds 35% of the holder’s income.

In short, obtaining a mortgage for non-residents is a bit more complex than for a national, but nothing that a good mortgage broker cannot solve thanks to their experience in processing all types of mortgages.