Spanish Mortgages

Buying a property in Spain may be an attractive investment - as your main residence, as a 2nd residence for vacations, or to rent out as a source of income.

Property prices in parts of Spain may be relatively cheap - certainly compared to the UK - but are currently  increasing rapidly.  If you rent out your property in Spain, you may offset the interest you pay on a mortgage for the property against the rental income for tax purposes.

You may borrow up to 70% or 80% of the property value - although this reduces to 50% for more rustic properties.  The maximum mortgage term is for 30 years or until the borrower is aged 70 which ever is sooner.  Mortgages are normally repayment mortgages, although a period of up to tens years interest only payments may be available.

Spanish interests rates are currently lower than UK rates and competition is fierce.  If you are not a legal resident of Spain, you may need to provide the lender with a guarantor or "aval"  - a person who is based in Spain and who agrees to pay in the event of your being unable to.  You will also need a NIE - an ID number everyone needs to buy or sell property in Spain.

You will need to take account of currency exchange issues.  If you do not borrow the money in Euros, you may need to pay up to 5% to convert what you have borrowed into Euros before you can use it for purchasing a property in Spain.  Currency fluctuations can work for or against you - the cost of converting currency will always be against you.

There may be regional variations on the proportion of a property value that can be borrowed against a mortgage - no more than 70% in some areas.

You are strongly advised to seek professional legal help from a specialist lawyer who speaks Spanish well and can offer advice on the Spanish Legal system.

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