Buying property in Spain with a mortgage: tips for foreigners

Buying property abroad is not easy peasy. Most of the effort goes into figuring out what you want and can afford before you even start searching.

Having a strategy and a checklist can optimize your search when purchasing a home in Spain.

I'll start by breaking down the budget and then share some tips to gain a broader perspective on the Spanish property market.

Here are my insights.

What is my budget, and what options do I have?

I like to have a clear overview, so the first step in my buying process is understanding my budget and what I can afford.

This is helpful whether you're looking to buy property in Madrid, Valencia, or any other area in Spain.

Getting a mortgage is a smart move. I need to quickly pull together my financial profile to see if I qualify for financing from a Spanish lender.

My financial profile

Together with my co-applicant, let's say we have a combined income of €8000.

We're looking to buy a property in Malaga for around €150,000, and we have a deposit of €50,000, which means we'll need around €100,000 in financing.

As Romanians living in Luxembourg, our income is in euros, which gives us plenty of options to secure a mortgage from a Spanish bank.

Since neither of us has any debts and our credit reports are solid, I believe we're strong candidates for a mortgage.

Applying with a co-applicant means the bank can consider our combined financial situation, making our application even stronger.

My mortgage options

Using Homevest, I can understand my potential loan amount and receive a simulation of my estimated affordability.

Homevest budget estimation uses my cash flow to determine my annual debt capacity based on criteria used by banks in Spain, independent of the down payment. It reflects my ability to meet financial commitments and repay liabilities without overstretching.

If you want to see how much you can afford yourself, use Homevest to estimate your budget.

By sharing key details like your residency, income, expenses, and liabilities, you and your partner can see how much you can afford—making it especially useful for anyone interested in real estate in Spain.

If I want to receive a non-binding offer from the bank, I need to provide the requested mortgage documents. Once I submit the file, the bank will issue the offer within 4 to 12 days.

Keep in mind that these offers are valid for 30 days, and the prices can change with fluctuations in Euribor.

However, banks usually prioritize applications where a specific property has been selected.

They need to check the property's value and the city where you plan to buy. Taxes and fees for registration and notary services can vary a lot by location.

If you already found a property, you could use Homevest to match with a mortgage broker who can find the right financing for your profile. 

This also motivates me to intensify my property search.

How can I find my dream property in Spain?

Before starting, I made a list of non-negotiables to define what I want in a property.

Whether you're interested in buying property in Spain for personal use or as an investment, knowing your priorities will bring you clarity.

Here are some questions to ask yourself:

• Do you prefer a remote location with few neighbors? Do you want to be downtown?
• Would you like an interior patio, or do you prefer a large terrace?
• How many rooms do you need? House or apartment?
• Is being close to public transportation important, or is it not your priority?

For example, I prefer an apartment in a 15-minute city concept, where essential urban amenities and services are conveniently within a 15-minute radius. Of course, I'd rather live in a quiet area than a noisy one crowded with tourists.

Once I've defined these aspects, it will be easier to start looking for properties in Málaga.

Where do I start looking to buy property in Spain?

Visiting the city and exploring the neighborhoods would be great, but do we always have time for that? Probably, I'm not alone.

What other alternatives are there?

Idealista is a top site for real estate in Spain. But, users on Reddit say scams are rising there. So, I'm hesitant to take the risk.

Kyero seems like a more trustworthy property portal, with over 90,000 properties listed in Málaga. After filtering by my budget, I have a list of 2,000 properties.

I applied more filters, like my need for a two-bedroom apartment. I also used my checklist. Now, I've narrowed it down from 200 properties to 5 apartments to consider.

If I want someone who speaks my language, there are options too. Explor Real Estate and CaseSpania are worth considering. They speak Romanian and have listed properties in Málaga too. It's a great fit, I would say.

Searching for a property on your own is doable, but why not benefit from someone else's experience?

Over the years, I've learned to ask for help from the pros to make life easier.

Pro advice on finding your dream property in Spain

I reached out to Anda from Explor Real Estate, a real estate agency specializing in properties in Costa del Sol, to ask for insights to help guide me on my property journey.

"With a budget of 150,000 EUR, it's best to look outside Málaga's city center. Neighborhoods like Ciudad Jardín, Cruz de Humilladero, and Teatinos offer properties within your budget and provide good access to public transport, schools, and shops. In contrast, areas like Centro Histórico or La Malagueta are typically more expensive and harder to afford on this budget.

Keep in mind that the listed price doesn't include additional costs like notary fees, transfer taxes, and potential renovation expenses, which could add up depending on the property's condition.

It's worth browsing websites like Fotocasa and working with a local real estate agent familiar with the area.

Hiring a lawyer is essential to perform thorough due diligence. This guarantees that all legal, fiscal, and technical checks are done before purchase.

Avoid paying anything upfront until you or a trusted agent has personally viewed the property, and your lawyer has approved all documents to prevent scams or misrepresentation.

If you're looking at resale properties, negotiation is common, and a skilled real estate agent can help you get a better deal.

If your aim is to invest, Málaga has restrictions on tourist rental licenses. No new licenses are being issued, and existing ones aren't renewed. For better short-term rental opportunities, consider nearby areas like Marbella, Estepona, or Benalmadena, which have fewer restrictions and offer greater potential returns", says Anda after I asked her for tips on a 150,000 EUR budget.

Which areas should I avoid if I'm looking for a tranquil setting? I prefer to be close to amenities, but I also value peace and quiet at home.

When seeking a tranquil setting in Málaga, avoid areas known for their bustling activity and nightlife. While being close to amenities is important, some neighborhoods tend to be noisy and crowded.

For example, while Centro Histórico is rich in culture and offers many amenities, it is also very busy, especially during tourist season. The streets can be quite lively, which may not provide the quiet atmosphere you want.

La Malagueta, famous for its beach and nightlife, becomes particularly noisy in summer due to beach bars and tourist traffic.

Similarly, El Palo and Pedregalejo are neighborhoods with a charming seaside atmosphere and plenty of restaurants, but they can also be quite lively, especially on weekends and in the summer.

To balance peace and convenience, visit potential neighborhoods at different times of the day to gauge the noise level and activity before deciding.

How quickly should I decide if I find a property that meets my requirements?

The speed of your decision on a property depends on market conditions, the property's desirability, and your readiness to proceed. In Málaga, the real estate market can be competitive, especially in popular neighborhoods.

Acting quickly on a property that meets your needs is often wise, as desirable homes may attract multiple offers. 

However, don't sacrifice thoroughness for speed. Rushing can lead to missed details.

Make sure you conduct a complete due diligence process —including legal, fiscal, and technical assessments— with the help of a qualified lawyer to avoid any hidden issues.

Your readiness also plays a crucial role. Make sure your financing is in place and you're prepared for potential renovation costs. A knowledgeable real estate agent can help you assess the property's value and the urgency of acting.

In summary, while it's important to act quickly, thorough evaluation is key. Balancing speed with careful due diligence allows you to make a confident and informed decision.

Final thoughts: your next steps to buying property in Spain as a foreigner

Buying property and getting a Spanish mortgage is a big step, and you wouldn't want to jeopardize your chances of finding something suitable.

Just because it's a significant decision doesn't mean the process is impossible.

You need the right support, whether it's a budget or tax calculator, a mortgage broker, or a real estate agent.

Find what works best for you and make the most of this journey. There are plenty of solutions for everyone.

¡Buena suerte!

Sources used in this article:

1. 15-minute city concept
2. Scams on Idealista
3. Kyero Property Portal
4. CaseSpania Real Estate
5. Explor Real Estate

We recommend obtaining professional or specialist advice before taking or refraining from any action based on the content in this article. The information in this article does not constitute legal, tax, or other professional advice from Homevest Limited. Prior results do not guarantee a similar outcome. We make no representations, warranties, or guarantees, whether express or implied, that the content in this article is accurate, complete, or up to date.