Getting a mortgage in Spain

Short answer: yes, you can get a mortgage from a Spanish bank. But expect 60 to 70 per cent rather than the loan-to-value you are used to at home, and expect a bank that calculates on its own valuation rather than the price you agreed. That difference decides how much cash you actually need.

How much do Spanish banks lend?

What matters is not your passport but whether you are tax resident in Spain. If you are not — and that applies to almost everyone buying a second or holiday home — you fall into the non-resident category, and the loan-to-value is structurally lower.

And here is what catches people out: those funds come on top of the purchase costs. On a €250,000 property on the Costa Cálida you pay roughly €27,000 in tax, notary and registry fees, plus €75,000 of your own money at 70 per cent finance. So you need well over €100,000 available, not three quarters of it. The regional breakdown is in our article on what buying a house in Spain really costs.

The bank lends against its valuation, not your price

Every Spanish bank sends its own surveyor and sets the valor de tasación. The maximum loan is calculated on the lower of two figures: that valuation or the purchase price. If the valuation comes in under what you agreed, your mortgage falls with it and you cover the gap.

Note that this is a different figure from the valor de referencia held by the land registry, which is what transfer tax is calculated on. Two values, two purposes, and both can differ from your price.

If you hold a British passport: two things that changed

Since Brexit, British buyers are third-country nationals in the eyes of Spain. The mortgage itself works much the same, though some lenders apply tighter criteria to non-EU applicants. What genuinely changed sits around the purchase.

The 90/180 rule. You can spend up to 90 days in any rolling 180-day period in the Schengen area without a visa. Owning a property does not extend that by a single day. If you want longer, you need a residence permit, which is an entirely separate process from buying. This is worth settling in your own mind before you commit to a mortgage: a twenty-year loan on a place you can legally occupy for three months at a time is a different proposition from a retirement plan.

Currency. Your mortgage is denominated in euros. If your income and savings are in sterling, every monthly payment moves with the exchange rate, for twenty years or more. That risk runs in both directions and it is not theoretical — it is one of the main reasons some British buyers release equity at home and buy outright in Spain instead. Talk to a currency specialist or your own adviser rather than accepting whatever rate your bank offers on transfer day.

If you hold an Irish or other EU passport, neither of these applies to you: you retain freedom of movement and you are an EU national to Spanish lenders.

A Spanish mortgage, or finance from home?

The obvious question is whether your own bank can simply handle it. Usually not. UK and Irish lenders rarely accept a Spanish property as security, because both the valuation and any enforcement sit in another jurisdiction. What does often work is releasing equity from a property you already own at home.

Being able to buy as a cash buyer is a real negotiating argument in Spain. Sellers who have already watched one sale collapse over finance will often take certainty over the highest price. Which route is right for you, financially and for tax, is a question for your own adviser — not for an agent.

What a Spanish bank will ask for

The application stands or falls on a complete file. What is asked for almost every time:

Banks also assess your total monthly commitments against your net income, including what you already pay at home. The self-employed face a stricter assessment than employees, and some banks apply a margin to declared income.

What the mortgage itself costs

On top of the purchase costs comes the mortgage: allow roughly two to three per cent of the loan amount. That covers the compulsory valuation, an arrangement fee and the products the bank ties to the loan — usually buildings insurance and often life cover with the same bank. Those tied products bring the rate down but cost you elsewhere, so always ask for the rate both with and without.

One piece of good news: since 2018 the stamp duty on the mortgage deed is paid by the bank, not the buyer.

Sort the finance before you make an offer

This is where it goes wrong in practice. In Spain you sign a private purchase contract with a deposit, often ten per cent, and a hard deadline for completion. Miss that deadline because the finance takes longer or comes in lower, and in many cases the deposit is gone.

An application takes four to eight weeks from a complete file. So start with the bank, not with the property. What happens after that is set out in from offer to keys.