Mortgages in Spain, how do they work?

Applying for a Spanish mortgage – complete guide

Buying a home in Spain is a dream for many Dutch people. This often involves taking out a Spanish mortgage, and although it seems similar to the process in the Netherlands, the process in Spain works slightly differently. Consider the maximum financing, stricter documentation requirements, and other tax rules.

In this guide, you will find step-by-step instructions on how to:

how Spanish banks assess mortgage applications,
the maximum amount you can borrow,
how the application process works,
what the differences are with the Netherlands,
which banks are reliable,
how mortgages work through a BV or S.L.,
and what tax implications apply to purchase, ownership, rental, and sale.

1. What do Spanish banks look for?

Spanish banks are cautious when granting mortgages, especially to foreigners. They want maximum assurance that you are able to repay the loan. That is why they assess several factors:

Income and stability

Banks look not only at how much you earn, but also at how regularly you earn it. A fixed salary or pension provides more security than variable or temporary income.

Existing financial obligations

Do you already have a mortgage, personal loan, or revolving credit? Then this counts. Credit cards with an outstanding limit are also considered liabilities, even if you use them infrequently.

Age

Most banks require that the mortgage be fully repaid before you turn 75. A younger buyer can therefore more easily obtain a long term than someone over the age of 60.

Credit history

A BKR registration or an international credit report plays a role. Negative registrations reduce the chance of approval.

Ratio between income and expenses

A rule of thumb is that your monthly mortgage payments should not exceed 30–35% of your net income. If you already have ongoing obligations, these will be included in the calculation. What does this mean? Examples include loans, lease contracts, other mortgages, and phone contracts with a phone included.

2. What is the maximum amount you can borrow?

Spanish banks apply a different financing percentage than Dutch banks:

You can usually borrow up to 70% of the purchase price or the appraised value (whichever is lower).
You must therefore contribute the remaining 30% yourself.
On top of that, there are the buyer's costs (transfer tax, notary, registration, lawyer, etc.). These often amount to 10–15% of the purchase price and cannot be financed.

In short: anyone buying property in Spain must take into account a substantial personal contribution.

3. Preparation: know what you can spend

Before you start viewing houses, it is wise to know how much you can borrow. This will prevent you from falling in love with a property that is not within your budget.

A bank or advisor can calculate your borrowing capacity in advance, based on your income, age, and obligations. This provides clarity and prevents disappointment.

4. Mortgage application: one bank or several banks?

In Spain, conditions vary greatly from bank to bank: interest rates, terms, additional costs, and even the speed of the process. That is why it can be worthwhile to submit multiple applications.

Advantage: you can compare offers and choose the best deal.
Disadvantage: you often have to resubmit the same documentation, which takes more time.

A good mortgage advisor can coordinate this process for you and take a lot of work off your hands.

5. Mortgage advisor: to use or not to use?

Hiring a consultant usually involves a fee, but often offers significant benefits:

You don't have to figure out all the Spanish documents and procedures yourself.
You will have access to multiple banks and their terms and conditions.
You will avoid errors or missing documents in your application.

We work with an advisor who has extensive experience with Dutch clients and Spanish banks. This can significantly speed up and facilitate your process.

6. Required documents

Spanish banks require a lot of documentation, often translated or legalized. The exact list varies per bank, but these are the standard documents:

Personal information

Color copy of passport
BSN
Address details
Mobile numbers and email addresses per person
Marital status (married, cohabiting, single)
Information about children living at home
Occupation and start date of employment or proof of retirement

Financial information

Last 3 pay slips or pension statements
Proof of other income (e.g., rental income)
Most recent annual statements or tax returns
BKR report or international credit report
Bank statements for the last 6 months (income and loan accounts)
Mortgage statements for the last 6 months (if applicable)
Mortgage certificate (term, monthly payment, balance)

Preparing and submitting these documents in full is often the most time-consuming part of the application process.

7. Differences between Spanish and Dutch mortgages

Maximale financiering

Spain: max. 70% of purchase price or appraisal value.
Netherlands: max. 100% of market value.

Term

Spain: usually 20–25 years, sometimes 30 years.
Netherlands: standard 30 years.

Age limit

Spain: mortgage must be repaid before the age of 75.
The Netherlands: no legal limit, but stricter at a later age.

Types of interest rates

Spain: mainly variable (Euribor + margin). Fixed interest rates are possible, but less common and with shorter fixed terms.
Netherlands: wide choice of fixed interest periods (5, 10, 20, 30 years).

cost-coverer

Spain: 10–15% of the purchase price, not eligible for financing.
Netherlands: 4–6%, also not eligible for funding.

Mortgage interest deduction

Spain: no deduction for foreigners purchasing a second home. Only in limited cases for tax residents.
Netherlands: deductible for primary residence (under certain conditions).

Income standards

Spain: max. 30–35% of net income spent on housing costs.
Netherlands: calculated based on NIBUD standards.

Mortgage application process

Spain: extensive documentation, often translated and legalized.
The Netherlands: faster and more standardized.

National Mortgage Guarantee (NHG)

Spain: not available.
The Netherlands: possible, with lower interest rates and extra security.

8. Well-known banks for mortgages

Santander Bank

Spain's largest bank, with extensive experience with foreigners. Large branch network, but conditions vary by region.

BBVA

Modern bank, strong in digital solutions. Mortgages can often be arranged online. Sometimes stricter requirements for foreigners.

CaixaBank (La Caixa)

Known for customer service and multilingual support. Terms and costs vary by province.

Sabadell Bank

Flexible towards foreigners and with nationwide coverage. Bureaucracy can sometimes be time-consuming.

Bankinter

Medium-sized bank, often attractive due to competitive interest rates. Fewer physical branches than the major players.

Abanca

Strong presence in Galicia and Northwest Spain. More personal approach, but less internationally oriented.

In addition, there are smaller local savings banks ("Cajas"), which are often less accustomed to dealing with foreigners and have limited digital capabilities.

9. How can you recognize a reliable bank?

Registration with the Bank of Spain.
Experience with mortgages for foreigners.
Clear communication about interest rates and additional costs.
Digital customer environment for documentation and communication.
Transparency in costs, including notary fees, registration fees, and mandatory insurance.

10. Mortgage via a BV or S.L.

1. Dutch private limited company

Spanish banks are cautious and almost never grant mortgages to foreign legal entities.

2. Spanish S.L.

A Spanish company (Sociedad Limitada) can obtain a mortgage, but commercial conditions apply: higher interest rates, lower financing, and more documentation.

3. Alternatives

Financing through a Dutch bank or private financier.
Utilize own resources from the corporation.
Establishment of a Spanish subsidiary to purchase the property.

4. Why be cautious?

Foreign financial statements and tax returns are difficult to assess.
Documents must be translated and legalized.
Legal proceedings in the event of foreclosure are more complex for foreign legal entities.

11. Tax considerations

Purchase costs

For existing buildings: ITP (Impuesto de Transmisiones Patrimoniales), usually 6–10%.
For new construction: IVA (10%) + AJD (1–1.5%).

Form of ownership

Private: simpler and often more tax-efficient.
S.L.: more administration, but attractive for rentals and investments.

Rental and income tax

Private (non-EU resident): 19% tax on rental income (24% outside the EU). Costs deductible for EU residents.
S.L.: 25% corporate income tax, with deduction of costs and depreciation.

Capital gains tax

In many regions of Spain, capital gains tax applies. In the case of private property, the home counts towards your capital gains, and in the case of S.L., indirectly via the value of the company.

Sale and capital gains

Private (non-EU resident): 19% on profits.
S.L.: 25% corporate income tax on profits.
Always also municipal plusvalía (tax on land value increase).

Practical advice

For a vacation home or second home, private ownership is almost always easier and more cost-effective.
For investment purposes (multiple apartments, long-term rentals), an S.L. can be an attractive option.
Purchasing through a Dutch private limited company often leads to double costs and is rarely tax-efficient.

Example calculation:

Purchase price: €200,000

The bank therefore finances a maximum of 70% of this amount.

€200,000 x 70% = €140,000 as a mortgage

In this case, it means that you must contribute €60,000 of your own funds for this property (€200,000 - €140,000).

In addition to the portion that you must contribute towards the purchase price, you must also pay all other costs yourself. These cannot be co-financed.

Other costs:

Tax: €20,000 (this may vary by region, but for the Community of Valencia it is 10%)

Notary: €1,500 (may vary depending on the notary)

Lawyer/gestor: €2,000 (usually 1% of the purchase price, often with a minimum amount)

Registration fees: €650

Administrative costs: €400

NIE numbers / Power of attorney (2 persons): €500

Total other costs: €25,050

In total, the personal contribution when purchasing a home worth €200,000 would therefore be:

€60,000 + €25,050 = €85,050

Do you have any questions about this guide to mortgages in Spain, or would you like assistance with purchasing property in Spain? Please contact us and we will be happy to help you.