Remortgage in Spain for non-residents: is it possible?

If you own a property in Spain but live abroad, you may be considering remortgaging for a number of reasons. 

Remortgaging could help you secure lower interest rates, reducing your monthly payments. It also offers other benefits, such as better loan terms, extra funds for a new project, or using some of your property's value for other needs.

Remortgaging offers more flexibility and can be a good financial move.

Can non-residents remortgage their property in Spain?  

Yes, residents and non-residents can remortgage to get better interest rates or access extra cash, but non-residents often face stricter bank requirements. 

Similar to the initial mortgage process, there may be fewer banks willing to offer remortgage options to non-residents, as they are considered higher risk.

What are the eligibility criteria for non-residents to remortgage in Spain?

The rules for non-residents who want to remortgage depend on a few things, and one of the most important is the property's value. If you wish to release some equity, the bank will closely examine the loan-to-value (LTV) ratio. 

Banks usually allow foreigners to borrow up to 60-70% of the property value. 

Then they also look at your financial situation, including your income and credit history, both in Spain and abroad. 

Lenders love seeing that you have a steady income and low levels of other debts to ensure the loan they give you is not too risky for them.

Additionally, your country of residence also makes a difference, as banks quite often have different rules for people from EU countries compared to those from outside the EU. 

Non-EU residents face even stricter requirements and must show more proof of financial stability, like assets or savings, which is normal bank behavior throughout Europe.

If you are self-employed, you'll have to show extra documents, like annual tax returns, quarterly VAT payments, and bank statements, to prove that your income is stable. 

What are the benefits of remortgaging in Spain? 

One of the main reasons we remortgage in the first place is to get a mortgage with a better interest rate, right? This lowers your monthly payments and saves you your hard-earned cash in the long run. 

By changing lenders or renegotiating, non-residents and residents alike try to negotiate better conditions, like a longer repayment time, better fixed or variable rates, or fewer fees. 

If your financial situation has changed since you first took out the mortgage, this can help you manage your monthly payments more easily. Better terms could also mean fewer penalties for early repayment or more options for overpaying without extra charges.

And finally, remortgaging allows us to release some of the value tied up in their property. 

We can use this money for different things, like home renovations, buying another property, or covering other personal financial needs. 

Releasing equity can also help you cover big expenses or even be used for investments, making it a good choice if you want to make the most out of your property. 

What are the common challenges for non-residents looking to remortgage in Spain?

One major challenge is that not all banks are willing to give remortgages to non-residents, limiting the available options.

For instance, UCI doesn't do remortgaging for non-residents, meaning borrowers may need to look longer to find the right bank. 

Even when remortgage options are available, the rules are typically stricter, making qualifying harder. 

If your income is in a currency other than euros, fluctuations in exchange rate can pose a problem. If the value of your currency drops against the euro, your mortgage payments could become more expensive. 

For example, if you earn British pounds and the pound’s value falls against the euro, your payments will cost more. On the other hand, if you earn in U.S. dollars, a rising dollar value could work in your favor. 

How does the remortgaging process work for non-residents in Spain?

The remortgaging process for non-residents is a lot like it is for residents, but usually involves extra checks by the banks. 

First, the property owner must apply to a bank offering non-resident remortgaging. 

The bank will then look at the property value and the person's financial situation, including their credit history, job status, and income. The bank can also ask for a new appraisal of the property to see what it's worth now.

If the bank approves the remortgage, you will need to provide some documents, like proof of income, the original mortgage agreement, property details, and up-to-date tax information. 

They will then check if you can handle the new mortgage payments by looking at your debt-to-income ratio. 

Once all the conditions are met, you will sign the new mortgage terms in front of a notary, and the remortgage process will be finished.

Is there a way to simplify accessing remortgage options from abroad?

A valuable resource that can save you time is Homevest, a digital platform that connects you with local mortgage brokers. 

They can guide you through the process, help build your application, and secure the best terms for your profile.

Connecting with a mortgage broker is free of charge; they earn their commission from the banks once the mortgage is successfully completed.

Conclusion

There are also some costs that come with remortgaging, like valuation fees, notary fees, and possibly early repayment charges on the original mortgage. 

Even though these costs can add up, the benefits of getting a better mortgage rate or accessing equity might make it worth it. 

It's a good idea for non-residents to speak with a mortgage specialist to understand all the costs and benefits before moving forward.

Sources used and checked in November 2024:

1. Bankinter: How to remortgage your home
2. Guide to changing your mortgage in Spain
3. Banco De Espana: Modifying or changing mortgage conditions
4. Caixa Bank Research: Buying a home in Spain and taking out a mortgage as a foreigner
5. BBVA: Documentation required to apply for a mortgage

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.