Mortgage in Spain for UK citizens: everything you need to know

Thinking about owning a property in a sunny, warm destination?

Spain could be the perfect place for your next home. With over 290,000 UK citizens already forming a strong expat community, settling in might feel much easier.

This guide covers everything you need to know about getting a mortgage in Spain from the UK – from the best mortgage options available for UK buyers to the application process and tax implications.

Let's begin.

How easy is it to get a mortgage in Spain from the UK?

Although Brexit has introduced changes, UK citizens can still buy property in Spain and obtain mortgages, much like before.

You will need to meet the bank's criteria and demonstrate a solid financial standing for loan repayments.

Post-Brexit, two key changes for British nationals include:

• stays in Spain are now limited to 90 days without a visa
• renting out property in Spain may result in higher taxes compared to those imposed on EU residents

How do mortgages work in Spain?

The mortgage system in Spain differs from the UK. Non-residents typically have access to three types of mortgages:

1. Fixed-rate mortgages

Provide stability and protection from economic changes. Terms are usually shorter (around 20 years vs. 30 years for variable-rate mortgages). Some Spanish banks only offer this option to euro earners, limiting choices for UK citizens.

2. Variable-rate mortgages

The interest rate adjusts every 6 or 12 months, depending on the bank. While the initial rate is lower than fixed-rate mortgages, monthly payments can fluctuate, making budgeting more difficult.

3. Mixed-rate mortgages

Begin with a fixed rate for a set period, then switch to a variable rate. After the fixed period, the rate is based on the Euribor plus a margin specified in the contract.

For non-residents, banks typically offer 60-70% Loan-to-Value (LTV), requiring a larger deposit.

What are the current mortgage rates in Spain for non-residents?

In the UK, rates are tied to the Bank of England's base rate, while in Spain they follow the Euribor.

Mortgage rates in Spain currently vary between 2.55% and 4.5%, depending on the lender and any additional products bundled with the loan.

Using a mortgage broker can help you secure better deals while saving time and effort.

Brokers compare multiple offers and handle all the necessary paperwork for you. Homevest connects you with mortgage brokers in Spain, allowing you to compare offers from top banks.

Which Spanish banks offer mortgages to UK citizens?

UK citizens earning income in GBP have several options for mortgages from Spanish banks, including Sabadell, Santander, CaixaBank, Cajasur, and Bankinter.

Each bank offers distinct terms and conditions, making it essential to compare their features.

Let's take a look at the key highlights of these leading Spanish banks for UK buyers:

What deposit do you need for a mortgage in Spain from the UK?

You'll generally need to make a down payment of around 30% to 40%, plus cover taxes and fees.

Most Spanish banks offer financing up to 70% for non-residents, but this depends on the individual's financial profile.

Before moving forward with your mortgage process, check how much you can afford. With Homevest, you can quickly estimate your budget and assess your affordability.

What documents are required to get a mortgage in Spain?

When it comes to the mortgage documentation checklist, UK citizens should have their tax forms and credit reports ready for the bank's initial evaluation.

The application must include their national ID, proof of employment, recent payslips, bank statements, and evidence of deposit.

Banks prefer applicants with stable employment, so it's best to apply while in a secure job.

How do you apply for a Spanish mortgage from the UK?

1. Start by obtaining your NIE number, required for property and mortgage transactions in Spain.
2. Gather and organize your documents for the application.
3. Obtain pre-approval to see how much the bank might be willing to lend you. This is a preliminary check, so it doesn't guarantee the loan.
4. Have the property appraised as part of the mortgage process.
5. Receive the FEIN (European Standardized Information Sheet) and then the formal mortgage offer from the bank.
6. Finalize the process by signing the mortgage agreement.
7. Collect the keys to your new property in Spain.

NIE application requirements 

The NIE is a Foreign Identification Number you can obtain from the Spanish consulate in the UK.

Prepare the necessary documents, pay the associated fee, and you should receive your NIE within a few weeks.

Spanish bank account

You'll also need a Spanish bank account when buying a house in Spain.

Having a local account makes everything smoother and gives you better options.

Before deciding what Spanish bank account is suitable, learn about the requirements, compare costs, and explore accounts for non-residents.

What is the mortgage reflection period in Spain?

The mortgage reflection period in Spain is typically 10 days, allowing borrowers to review the terms of their mortgage before finalizing the agreement.

In Catalonia, this period is extended to 14 days due to regional regulations.

During this time, borrowers can reconsider the offer, seek advice, or withdraw from the agreement without penalties.

What are the tax implications of buying property in Spain?

When buying property in Spain, you should have additional funds to cover costs beyond the down payment, such as taxes, notary fees, and other related expenses.

Taxes for resale properties

For resale properties, the main tax is the Property Transfer Tax (ITP), which varies by region and can range from 6% to 11% of the property's price. 

Property Transfer Tax for second-hand properties in the Canary Islands is set at 6.5%.

If you're unsure whether investing in a holiday home is worthwhile, comparing prices and exploring top holiday spots can help you make a decision.

Taxes for new properties

When purchasing new properties, buyers are responsible for Value Added Tax (IVA), typically at 10% of the purchase price, and Stamp Duty (AJD), which varies by region but is usually between 0.5% and 2%.

What other taxes should you consider?

• Notary costs, which range from 0.5% to 1% of the property's price
• Mortgage fees, which can include application, valuation, and arrangement fees
• Gestoría and bank fees that cover administrative tasks and bank-related costs
• Land registry fees, ranging from 0.5% to 1%

For an overall picture, read a guide about the taxes you need to pay when buying a property to avoid surprises along the way.

Frequently asked questions

Can I live in Spain permanently if I buy a property?

Buying property does not automatically grant you the right to live in Spain permanently especially if you are a UK citizen.

However, Spain offers a Golden Visa program that grants non-EU nationals a residence visa if they invest in real estate worth 500,000 EUR or more. Read on for more information and see what you need to do to qualify for residency in Spain by buying property.

How can British second homeowners spend more than 90 days in Spain after Brexit?

If you can prove you have enough money to live in Spain without working, you might qualify for a non-lucrative visa. This visa allows you to stay without working and can be extended.

Can I get a mortgage in Spain if I already have one in the UK?

Yes, getting a mortgage in Spain is possible even if you already have one in the UK.

However, your debt should remain under 30-35% of your income.

Can you retire in Spain from the UK after Brexit?

Yes, it is possible to retire in Spain even though the UK is no longer part of the EU.

You'll need to address several important considerations, including securing health insurance, before making this move. It's worth mentioning you have the option to transfer your pension from the UK to Spain.

Sources used and checked in October 2024:

1. UK residents in Spain
2. Buying property in Spain from the UK

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.