If you’re considering buying property in Spain and need financing, understanding how to secure a mortgage in Spain as a non-resident or expat is essential. In a recent interview, Bozena Brunowska, Senior Mortgage Broker at Mortgage Direct, shared clear insights into how the mortgage process works, what banks look for, and how to navigate the system effectively.
Who Is Mortgage Direct?
Mortgage Direct is a leading independent mortgage brokerage with nearly two decades of experience. The team consists of 24 qualified advisors who speak 17 languages and are fully registered with the Bank of Spain. They work with all major Spanish banks to help clients secure the most favorable mortgage terms. Bozena, who has over 9 years of experience in the industry, plays a key role in guiding international clients through the mortgage process.
How Much Can You Borrow? Debt-to-Income Ratio Matters
When determining how much you can borrow, Spanish banks primarily evaluate your net monthly income. Generally, they allow between 30% to 40% of your income to be allocated toward financial commitments, including the proposed mortgage in Spain.
Key factors also include:
- Age of the borrower
- Loan term requested
- Loan-to-value (LTV) ratio
This means older borrowers may qualify for shorter loan terms, and the LTV (typically up to 70%) will determine the amount you can finance relative to the property’s value or purchase price.
What Types of Income Are Accepted?
Spanish lenders differentiate between two main categories of income:
1. Guaranteed Income
This includes salaries and pension income. Banks typically count 100% of this income when assessing affordability.
2. Variable or Fluctuating Income
This can include rental income, dividends, bonuses, and overtime. Each bank has its own policy—some may consider 50% of this income, others up to 75%, or they may calculate an average over the past three years.
Understanding what income qualifies and how much of it counts is essential for setting realistic expectations for your mortgage application.
How Mortgage Direct Matches Clients with Banks
Mortgage Direct’s approach begins with a detailed assessment of your financial profile, including:
- Debt-to-income ratio
- Income currency
- Employment status (self-employed or salaried)
Based on this analysis, they identify the most suitable banks that are likely to approve your mortgage and present you with tailored proposals. This personalized, independent service helps avoid wasted time and rejections.
Property Type and Minimum Mortgage Amounts
Not all properties are treated equally when applying for a mortgage in Spain. Classification is based on what’s registered in the nota simple (the official Spanish property deed):
- Urban properties: Usually qualify for financing up to 70%
- Touristic or commercial properties: Financed between 50% and 60%
- Land purchases: Must be paid in full with cash before construction begins
If you plan to buy an investment property or build your own home, it’s important to understand these nuances early in your search.
How Does the Property Valuation Work?
Banks in Spain will finance the lower of the purchase price or the official valuation. One challenge is that the valuation company is assigned randomly by the bank’s system, which can sometimes result in conservative (lower) valuations.
Mortgage Direct mitigates this risk by consulting its panel of licensed valuation companies (registered with the Bank of Spain). These companies often return more accurate and favorable valuations, which can significantly affect the final loan terms and the amount of cash required from the buyer.
Timeline and Process: From Pre-Approval to Mortgage Signing
The complete process typically takes 2 to 3 months and involves the following steps:
- Initial Contact and Budget Calculation
Mortgage Direct assesses your borrowing capacity and helps you get pre-approved. - Bank Account Opening
A local Spanish bank account is opened early in the process. - Property Selection and Valuation Estimate
Once you find a property, Mortgage Direct consults surveyors for a valuation estimate. - Full Valuation and Bank Approval
If you agree with the estimated valuation, a full valuation is ordered. The bank then issues a binding offer known as the FEIN (Ficha Europea de Información Normalizada). - Cooling-Off Period
After signing the FEIN, there’s a mandatory cooling-off period (10 days in most regions, 15 in Catalonia). - Final Signing at Notary
You or your solicitor visit the notary to sign the “Acta”, a document confirming your understanding of the mortgage terms.
This structured approach ensures compliance with Spanish law and provides transparency throughout the process.
Conclusion
Securing a mortgage in Spain as a non-resident may seem complex, but with the right guidance, it becomes manageable. From understanding income requirements to navigating property types and valuations, Mortgage Direct offers comprehensive support tailored to international buyers.
If you’re considering purchasing property in Spain, getting pre-approved and working with an experienced broker can save you both time and money.
