Many of our clients have contacted us in the last few months with the same question… Are there any changes in the mortgages banks offer in 2021?
Our answer to these questions is clear… Banks are still lending and keen to provide mortgages for non-residents!
Here are the key points on Spanish mortgage offers from the banks in 2021, depending on tax residency of the applicants:
Loan to Value (LTV) for non-resident mortgages.
As a general rule, banks are ready to lend a maximum of 70% of the property price (or valuation, whichever is the lowest of the two). Remember that this does not include taxes and other costs, only the price of the property! There are some changes we find depending on the applicant’s tax-residency:
- Non-residents with income in Euros can choose to finance up to 70% LTV.
- As for non-residents with income in other currencies, it will depend on their tax residency and banks. Here are the best terms we are currently achieving for our clients:
- Non-resident mortgages for clients with tax residency in the UK – although the general rule in the last years has been a 60% LTV, we are finding options at 70% LTV. This will obviously depend on the client’s finances, property price and other factors each bank will consider. These are not straightforward to get, but, as always, we will do our very best to get them for you!
- Non-resident mortgages for tax residents in Switzerland, USA, Russia, Sweden, Norway, Denmark, or Poland – banks are generally reaching a maximum LTV of 70%.
- For other tax-residencies, please to contact us to enquire! We find that the general rule is for banks to offer a maximum of 60% LTV, but we have also found that, due to the new mortgage laws, some clients have been rejected a mortgage only because of the currency of their income.
Mortgage term.
The maximum term for a non-resident mortgage in Spain is generally 25-years, as long as the mortgage is paid off before the borrower reaches 70 or 75 years of age, depending on the bank and finances.
Interest Rates.
Interest rates are at a historic low, so many clients are taking advantage of this. Although non-resident mortgages generally have higher interest than resident mortgages, in some of the banks there is no difference or this is very small.
Fixed interest mortgages are available for non-residents earning their income in Euros! And we are also achieving fixed interest mortgages for UK residents and other nationalities who do not have their income in Euros thanks to special agreements with certain banks we work with. Thanks to the historically low interest rates, offers for non-residents can start as low as 1.65%, but varies a lot case per case. A normal fixed interest rate would be between 1.9% and 2.5% (updated March 2021).
Many banks will only offer variable interest mortgages to non-residents, as this is less risky for the bank. For clients, this means paying less now, but with time, it can also mean paying more. The reference index for variable interest mortgages in Spain is EURIBOR, and it is right now at its historical low (rate for Feb 2021 of -0.511% – yes, negative!). Banks usually offer a spread on top of EURIBOR of between 1.25% and 2.5%, depending on your profile and other products contracted. The first 12 months on these mortgages is always fixed, and rates for this first year range from 1.4% to 2.5%. The more products you contract with the bank, the lower rate they can offer.
It could be difficult to say which option would be better for you, but please do not hesitate to contact us to ask so we can advise you.
Set up fees & other costs.
Thanks to the changes in the mortgage laws in 2018, most of the cost of setting up a mortgage now falls on the bank. So clients do not have to pay for notary, registrar and administrative taxes anymore as it was the case in the past. This saves clients around 2% of the mortgage amount.
Generally, clients will have to cover the following costs on setting up a mortgage:
- Valuation of the property – this is paid by clients in most cases. Cost is between 300€ and 800€ depending on the price of the property.
- Bank set up fees – these range from 0% to 2%, depending on the amount of the mortgage, bank and client’s finances.
- Combined products – if you contract home insurance, life insurance, or other products with the bank, these will have additional costs.
- Broker fees – ask your broker for a detail on their fees. Sometimes, there are no fees, other times these can be costly!
At Hipoteken, our fees are generally covered by the bank. There can be small fees applicable to clients to start the mortgage process, or on success in certain cases & banks. These will be clearly explained to you by our agents.
Early cancelation fees
By law, the early cancelation fees banks can charge are limited.
- In variable interest mortgages these are very low – 0.25% in the first 3 years, and 0% after this.
- In fixed interest rate offers these can be up to 2% in the first 10 years, and 1.5% maximum after this.
At Hipoteken, we are often able to get offers with 0% cancellation fees both for fixed and variable mortgages.
When you have some money saved up to pay a part of your mortgage early, you will be able to choose if you prefer to reduce the monthly payments, or the mortgage term.
Examples of mortgages we have signed recently.
Example 1 – Non-resident mortgage on fixed interest rate with combined products.
| Property purchase price | LTV | Mortgage granted | Type of mortgage |
| € 400,000 | 60% | € 240,000 | FIXED INTEREST |
| Interest rate | Mortgage term | Mothly repayment | Cost of combined sales products (monthly) |
| 1.60% | 25-years | € 971.16 | 4 € |
| Other terms |
The above case would require taking up home insurance with the bank, which is slightly more expensive than contracting directly with an insurance company, but it also has the advantage of being able to pay it monthly with no extra cost.
Example 2 – Non-resident mortgage on variable interest rate with no combined products.
| Property purchase price | LTV | Mortgage granted | Type of mortgage |
| € 315,000 | 70% | € 220,500 | VARIABLE INTEREST |
| Interest rate | Mortgage term | Mothly repayment | Cost of combined sales products (monthly) |
| EURIBOR+1.5% (1.5% fixed first year) | 20-years | € 1,064.01 | 0 € |
| Other terms |
Example 3 – Non-resident mortgage on fixed interest rate with no combined products.
| Property purchase price | LTV | Mortgage granted | Type of mortgage |
| € 100,000 | 70% | € 70,000 | FIXED INTEREST |
| Interest rate | Mortgage term | Mothly repayment | Cost of combined sales products (monthly) |
| 1.90% | 25-years | € 293.30 | 0 € |
| Other terms |
Example 4 – Non-resident mortgage on fixed interest rate with combined products.
| Property purchase price | LTV | Mortgage granted | Type of mortgage |
| € 140,000 | 70% | € 98,000 | FIXED INTEREST |
| Interest rate | Mortgage term | Mothly repayment | Cost of combined sales products (monthly) |
| 1.60% | 25-years | € 396.56 | 4 € |
| Other terms |
The above case would require taking up home insurance with the bank, which is slightly more expensive than contracting directly with an insurance company, but it also has the advantage of being able to pay it monthly with no extra cost.
Example 5 – Non-resident mortgage on fixed interest rate with combined products
| Property purchase price | LTV | Mortgage granted | Type of mortgage |
| € 750,000 | 70% | € 525,000 | FIXED INTEREST |
| Interest rate | Mortgage term | Mothly repayment | Cost of combined sales products (monthly) |
| 1.60% | 20-years | € 2,557.58 | 4 € |
| Other terms |
The above case would require taking up home insurance with the bank, which is slightly more expensive than contracting directly with an insurance company, but it also has the advantage of being able to pay it monthly with no extra cost.
Please be advised that depending on the bank and the interest rates, all the information above could change. Please take these as orientative only.
Contact us today so you we can work with you to obtain the best possible mortgage for you!
