Non-resident mortgages

Non-resident mortgages are loans bestowed by Spanish financial institutions to non-residents. Foreigners and Spaniards whose tax residence is not in Spain at the moment can be considered applicants for this sort of credit to acquire a second residence in Spain.

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Documentation for a non-resident mortgage

The economic-related documentation requested from non-resident citizens to evaluate the granting of the mortgage depends on each country. This is so because the regulation regarding the proof of income and property ownership differs from country to country. The foreign clients that enjoy the most diverse offer of this type of mortgage loan are the British and the German citizens. Although there are many more qualified nationalities, financial institutions offer this sort of mortgage only to certain European nationalities or some Western countries outside the Eurozone such as the USA.

Although it is possible that the financial institution in Spain agrees to receive the scanned documentation or by post, they usually require an in-person presentation of the original documents, as well as the signature of the deed in the presence of a notary.

Generally speaking, banks would ask for the following details to start off the non-resident mortgage analysis:

• Passport or NIE/NIFF
• At least the payslips of the previous 3 months, or proof of income.
• Labour contract (if hired hand) or self-employed worker.
• Bank statement during the previous 12 months of the bank account where the payroll and other sources of income are set up.
• The previous annual tax return that was submitted to the tax office of the client’s country.
• Proof of ownership of all assets (properties, vehicles, account balances…) in the country of origin.
• Tax residence certificate from the country of origin.
• If the client has any other loans, debts or credit cards, one must provide the last 3 receipts.
• Deposit contract after paying a deposit to the seller, if applicable.

Savings

Banks would never grant over 80% of the purchase or the selling price of the house. This implies that you must provide at least 20% of the transaction, plus the expenses (about 10%) of the purchase in question. For this reason, and based on the client’s profile, the banks could require your savings to come to 50% of the selling price.

Taxes to be paid by the non-resident buyer

Just like any other resident buying a house or a property, this acquisition is subject to a series of expenses and taxes.

The valuation of the house is a cost that amounts to 500 EUR on average.

With regards to the deed of the purchase, you may find yourselves in one of these two scenarios:

• Brand new properties: 10% VAT is applicable unless the property is considered an Officially Protected Dwelling. In the last case, the VAT applicable is only 4%.
• Second-hand properties: a Tax on Property Transfer is applied which depends on the Spanish Autonomous Community in question. It ranges from 4% to 10%.

Regarding the deed of the non-resident mortgage loan:

• The client must pay for the Document Duty and Registration Fees which goes from 0.5% and 1.5% depending on the Autonomous Community.

Apart from the above-mentioned taxes, the purchaser must also cover other expenses like the administrative expenses for both the deed of the purchase and the deed of the mortgage. In many cases, the client will also have to face the broker’s fees for professional services. All these expenses must be recorded in the European Standardised Information Sheet (ESIS), which must be handed in before signing in the presence of a public notary.

Non-resident mortgage to foreign residents in Spain

Do not get this mixed up. Mortgage loans for non-residents are different from the mortgages a foreign living in Spain (and being a tax resident) could access. Mortgages for residents in Spain, regardless of whether they were born in Spain or not, are common mortgages aimed at acquiring a first or second home. The target client of non-resident mortgages is those who pay their taxes outside of Spain. It has nothing to do with their nationality.

Non-resident mortgage conditions

Mortgages for non-residents are usually more expensive than mortgages for tax residents in Spain. There are several reasons, among which we highlight the following ones:

1. The difficulty for Spanish banks to assess the income-generating capacity of non-residents. They must analyze all documents from a foreign country and delve into foreign companies within sectors Spanish banks do not excel at.
2. The issue of having to recover the debt if the non-resident mortgagee defaults on the mortgage loan.

These are some of the reasons why Spanish financial institutions usually require more savings for the operation and offer worse financial conditions to non-residents. Nonetheless, mortgage brokers selected by Futur Finances have bespoke agreements with a wide portfolio of banks to offer the best mortgage conditions to non-residents in Spain.