The average interest rate in Spain for non-residents was 5.5% in October
The average interest rate in Spain for non-residents was 5.5% in October

Mortgage in Spain vs. Portugal: which is better?

Portugal has fewer banks offering loans to non-residents, while Spain offers a broader range of loan products, including those for buying and renovating homes for non-residents. Continue reading to understand which place offers the best deal for the home you've always wanted.

Delia Mihuț
Written by Delia Mihuț
Published at 2023-11-21
Last updated on 2024-04-15
Readtime 7 minutes

Picture this: you're relaxing on your terrace, sipping a glass of Sangria, or maybe enjoying a Porto wine while looking out at the sea. This dream could become your reality, but what's the first step? 

Deciding where to lay your hat—and your investment.

We've made a guide to help you understand mortgages in Spain and Portugal. We'll review interest rates, give you valuable tips, and discuss the pros and cons. 

Let's figure out together which place offers the best deal for the home you've always wanted. 

Mortgage in Spain vs mortgage in Portugal: an overview

Obtaining a mortgage in Spain as a non-resident means up to 70% financing with a minimum 30% down payment and extra costs. The process is complex, with a 35% debt-to-income ratio limit and additional documentation. 

Non-residents are eligible for 75-80% financing when accessing a mortgage in Portugal with foreign income. The offer includes up to 30-year terms with a debt-to-income cap of 35%.

Eligibility criteria

To qualify for a mortgage in Spain or Portugal as a non-resident, you are required to fulfill a range of criteria to be considered eligible by the bank. 

These include:

  1. Demonstrating sufficient income
  2. Establishing creditworthiness
  3. Making a down payment
  4. Obtaining a property appraisal
  5. Providing all necessary documentation

Documentation

For both Spanish and Portuguese mortgages, you will need identification documents such as a passport, national identity document, Foreigner Identity Number (NIE in Spain or NIF in Portugal), credit reports, and your latest tax returns.

Expect slight variations in the required documents between banks in both countries, particularly for non-resident applications. 

Mortgage loan options

You can obtain mortgages with fixed-rate and variable-rate options, tailored to your specific situation, in Spain and Portugal. 

However, in Portugal, the number of banks offering loans to non-residents is limited. In contrast, Spain offers a greater diversity of products, allowing non-residents to secure loans for buying and renovating houses.

Best banks in Spain vs. Portugal

To help you form an opinion about the offering of the best Spanish banks versus the best Portuguese banks for non-residents, let's make a brief comparison.

Lender Suitable for Pro Con
Santander (Spain) non-residents interested in properties under 100,000 EUR offers loans from 100,000 to 1,000,000 EUR higher pricing on mortgage offerings
Sabadell (Spain) non-residents seeking competitive offers allows interest rate reduction by 0.75% with bonus products requires a minimum 150,000 EUR property purchase
Cajasur (Spain) non-residents buying in Costa del Sol loan range is 80,000 to 1,000,000 EUR rental income is not counted towards income ratio
UCI (Portugal) self-employed buyers the convenience of submitting documents in original languages fewer product options
Millennium BCP (Portugal) non-residents earning outside the EU mortgages ranging from 25,000 to 2,000,000 EUR minimum property price is set at 100,000 EUR
Banco PBI (Portugal) Non-residents Portuguese and EU residents loans up to 1,500,000 EUR an opening fee of up to 1.0% may add to the overall cost of obtaining a mortgage

If you’re more interested in learning about the best Spanish mortgages for non-residents or exploring the top Portuguese mortgages for non-residents, remember that you can compare mortgage offers without any fees. 

Homevest is a solution that allows you to request and compare offers from leading banks in direct competition, ensuring you get the best mortgage deals. It’s an efficient way to see what loans you can access, whether in Spain or Portugal, directly from abroad.

What are the mortgage rates in Spain in 2024?

The average interest rate in Spain for non-residents was 4.25% in March 

The lowest interest rate was a fixed rate offer of 3.25%, and the highest was a variable rate offer of 6.40%.    

Bank Interest rate (effective rate past three months)
CaixaBank 4.25%
Sabadell 3.25%
Cajasur 5.72%
Unicaja 5.09%

The effective interest rate reflects the annual cost of a loan, accounting for the loan's duration and any initial promotional interest rate periods.

What are the mortgage rates in Portugal in 2024?

Mortgage rates for non-residents in Portugal change depending on the bank and mortgage type. It's important to also think about extra fees from the bank. 

A cost comparison made on April 15, 2024, can help understand these rates better.

Bank Interest rate 
UCI 1.64% + Euribor 6m
Novo Banco 1.1% + Euribor 6m
Banco PBI 1.65% + Euribor 6m

What are the tax implications of buying property in Spain vs. Portugal?

The costs for buying a property in Spain and Portugal vary, especially depending on where the property is and whether it's a new build or a previously owned one. 

Keep in mind that buyers usually have to pay most of these costs, which include:

Service Price in Spain Price in Portugal
Property tax 8-12% of the purchase price 1-8% of property value
Notary and land registry fee 800-900 EUR 800-1000 EUR
Legal fees 1% 1-3%
Estate Agent Fee 3-6% 5%

Mortgage for non-residents in Spain vs Portugal: pros and cons

Mortgage for non-residents in Spain: pros and cons

Pros
  • non-residents have access to a variety of mortgage choices
  • many Spanish banks accept documents in English, but there's a good chance of finding lenders who also accept documents in French, German, Swedish 
Cons
  • non-residents may face higher rates compared to resident mortgages
  • financing for non-residents is usually limited to 70% of the property value​
  • purchasing property over €500,000 no longer qualifies for the Golden Visa

Mortgage for non-residents in Portugal: pros and cons

Pros
  • property prices are generally up to 10% cheaper in Portugal than in Spain
  • most Portuguese lenders are open to various types of foreign income
  • general lowest cost of living compared to Spain
  • banks are more open to offering deals to certain citizens, such as Chinese citizens
Cons
  • some loan categories, especially long-term, may lack competitiveness
  • investment in real estate no longer qualifies for the Golden Visa
  • the price per m2 in the country's capital is 10% more expensive than in the capital of Spain

Is there any faster way to get a mortgage in Spain or Portugal from abroad?

To expedite the mortgage process from abroad, consider using a service like Homevest which can help you save time along your journey.   

Homevest allows you to centralize your mortgage application and request offers from top lenders in Spain or Portugal. The advantage is that you can manage everything comfortably from home without incurring any fees. 

Homevest specializes in matching you with lenders that best fit your financial situation, streamlining the process.

Here are all the Homevest advantages at a glance:
  • Free Homevest account to centralize your mortgage application 
  • Assistance in comparing and negotiating offers, saving time, and securing competitive deals
  • Multilingual support in English, Portuguese, Spanish, Swedish, Finnish, German, Italian, and Romanian
  • In-depth knowledge of the local property market

So which is better: a mortgage in Spain or Portugal?

It's entirely your choice which mortgage you opt for your new home, as it depends on your specific needs.

A mortgage in Spain offers a variety of choices and additional benefits, making it a solid option for equity building and potential appreciation. 

However, be aware that fees and prices might be slightly higher compared to Portugal.

Alternatively, if you prefer a smaller country with ocean access, consider a mortgage in Portugal. Both countries offer the potential to generate rental income, being popular destinations for tourists worldwide. 

Sources used and checked in April 2024:

  1. Cost comparison Spain vs Portugal

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.

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