Mortgages for foreign non-residents are mortgage loans that are aimed at foreigners who are not tax resident in Spain. According to the Real Estate Expert, Ignacio Acosta Sorge, these mortgages are dedicated exclusively to the purchase of a second home by a stranger, which results in obtaining mortgage works much the same way as for Spaniards acquire a second residence.
The percentage of purchases by foreigners is the environment of 15%, as a result we believe it important to inform adequately what steps they have to give to make the purchase safely, besides the requirements requiring financial institutions to grant mortgage.
Requirements for foreigners before applying for a mortgage
- Having NIE: Foreigners who, as a result of their professional, economic or social interests are related to Spain, will be gifted identification purposes, a number that is unique, personal and exclusive, which is also sequential character. According to Ignacio Acosta Sorge, who is also Panda Estates CEO, this personal number will be a kind of identifier abroad, which must appear on each and every one of the documents issued or processed, as in the measures which are affixed on his identity card or passport.
For the allocation of NIE because of economic, professional or social interests, the following applications will be accepted:
- The Spain submitted personally by the applicant.
- The presented in Spain through a representative.
- The arising in the diplomatic representations or Spanish consular offices located in the country of residence of the applicant, corresponding to their area of residence.
To obtain the NIE through the Embassy will require a period of approximately one week, except in the case of opting for sending the NIE by mail rather than e-mail, in which case the period may be to be better. In any case, the terms do not depend on the embassy, but the authorities in Spain.
For this we can also provide that:
– You can apply in person or through authorized representative office or branch office to the government and immigration offices.
– From abroad it is possible to process this document.
– The earnest money contract serves to expedite obtaining NIE.
For the allocation of that number must submit the following documents:
• Printed and standardized application, which is known as (EX-15), and must be signed by the foreign applicant.
• Original and copy of passport in full, you can still enter your ID, your registration certificate in force or travel document.
• Report on both social and economic reasons as professionals supporting the application of that mortgage.
• When the mortgage is requested by a representative, this person must prove that he has enough to make such a request.
• Note on validity of foreign public documents: To verify the necessary requirements for legalization and translation of foreign public documents can consult the information sheet of the General Secretariat of Immigration and Emigration.
- Open a bank account in Spain: In order to meet payments of home maintenance and payment of taxes acquisition of the house. The opening of the account must be in person to venture into the real estate industry in Europe, in this case especially Spain.
If for this or other reasons you need to open a bank account in Spain as abroad, The Spanish legislation and banks facilitate such activities and commercial transactions.
Steps to open a bank account as a foreigner:
- For the opening of bank accounts by foreigners, the Spanish legislation distinguishes between foreign residents (those who have residence permit) and non-residents.
- To perform this procedure banking, foreign residents considered due in the bank your NIE (nie number) and meet the other requirements to ask each bank to open a bank account.
- People considered non-residents need a certificate of residence to open a bank account in Spain. The certificate is obtained by going to any National Police Station.
- This certificate also can arrange the bank for us, but charges a fee for it. The real estate consultant, Ignacio Acosta has reported that the other document needed by non-residents to open a bank account is the passport or a valid identity in their country of origin.
- The general requirement that non-resident aliens need to get a bank account in Spain is a certificate of residence. They will be presented at the bank with this document, along with an identification document such as a passport, identity card of their country, driving license, etc.
- Each bank can ask a series of varying requirements such as income any amount to display a payroll, order photo, fingerprint, letter, among others.
Panda Estates Agency, notes that depending on the entity account for non-residents in Spain may have a limited lifetime. Some banks close these accounts after 6 months of being open. Costs and fees of these accounts are similar to those of residents and Spanish. Also operating is usually the same specific exceptions, as some accounts do not allow non-resident cards or overdrafts are covered.
- Keeping up with relevant taxes: The IRNR – Income Tax Non-Resident, is a Spanish tax levied on income earned in Spanish territory to individuals and legal entities.
It is considered resident in Spain if you spend more than 183 days during the calendar year. In this case it was taxed via income tax.
What require banks to grant a mortgage to a foreigner?
- To contribute between 30% and 50% of the value of property you want to buy. This will depend on the financial institution where the requested mortgage and financial position of the client (this means, type of work, age, annual income). According to the Euro-Residentes Portal, this contribution is greater because banks incur increased risk in this type of mortgage, because if the customer does not pay, it is impossible foreclose in their country of origin.
- Contribute to purchase the costs of buying and selling deeds and mortgages, which are usually 16% of the purchase price of the home.
- That the resulting mortgage payment for granting mortgage does not exceed 40% of the customer’s income, taking into account payments made in their country of origin by way of mortgage or rent.
- The documents must be translated by an official translator, however, more and more financial institutions account in their departments with translators which sometimes can avoid paying the translator.
According to data from the Land Registry, the 7 foreign nationalities most buy in Spain are as shown in the chart: English (16.72%), France (10.27%), Russians (7.47%), Germans (7.34%), Belgium (6.9%), Sweden (5.97%) and Italy (4.73%).
Obtaining mortgages for foreign non-residents, is simple and easy to obtain and can perform initial preparatory work email, receiving the scanned documents, later in the future arrange a meeting in person to sign the account opening and finalize the details.
How are mortgages for non-residents?
Mortgages for non-residents are mortgage loans that are granted to foreigners who do not have tax residence in Spain and who wish to acquire a second home in our country.
Importantly, not to be confused with mortgages for foreigners living in Spain, which may be the same as for anyone with Spanish nationality.
The maximum funding of this type of mortgage loans is typically 70% of the purchase value or valuation (always the smaller of the two) and the repayment period is as much of 30 years.
The interest rate paid by them may be higher than other mortgage loans. And the differential that adds to the Euribor can be placed close to 3.00% when, according to the calculator Bankimia index in June was at 2.23%.
It is worth mentioning that consideration will have this residence, if the buyer maintains fiscal residence in their country of origin, housing that is acquired in Spain, it can not be considered as habitual residence.
What banks offer mortgages to non-residents?
Currently three banks advertised mortgages for this segment of the population. One is Banco Sabadell, which offer up to three mortgage loans for non-residents: one for the purchase of a first home, another for the purchase of a second home and, third, to purchase an apartment owned by the SAREB.
During the first year the interest payable is 4.85%. For the remaining period will be of Euribor + 2.80%, with hiring a home insurance and a life, or Euribor + 3.55%, if these linkages are not assumed.
In addition, Banco Popular has available a mortgage for non-residents funds 70% of the value of housing in a maximum repayment period of 20 years. The company also markets other products for foreigners, as a savings plan, an account and a credit card.
Banco Popular sells an exclusive mortgage for non-resident foreigners. In this case, the maximum funding is 70% of the appraised value and the maximum repayment term is 20 years.
This bank offers a wider range of products for foreign non-residents since, in addition to the mortgage, also markets a Plan of specific savings for these customers (where you can enter both euros and dollars and withdraw cash at any time ), the Visa Golf Club with which the holder will enjoy discounts on hotels and golf courses and an exclusive bank account for non-residents.
Banco Santander also markets an exclusive mortgage for non-residents. This is the Superhipoteca Second residence offering initial interest rate of 6.25% (12 months) and Euribor + 5.00% the remaining life of the loan. The maximum funding offered by this loan is only 50% of the purchase or sale of the appraised value of the property (the lower of the two) and the maximum repayment term is 15 years. With a fee of 2.50% (minimum 841 euros) this mortgage does not require hiring related products.
“La Caixa” and Banco Santander also have an account for non-residents. Usually, with passport and residence certificate you can not open a bank account in Spain without being resident although some entities also request other documentation (such as a letter from the local bank).
Depending on the bank, the account for non-residents in Spain may have a limited lifetime. Some banks close these accounts after 6 months of being open. Costs and fees of these accounts are similar to those of residents and Spanish. Also operating is usually the same specific exceptions, as some accounts do not allow non-resident cards or overdrafts are covered.
Also we recommend you visit some other banks, since this situation could change, however, until now, the three banks mentioned above are the only ones to provide such benefits to non-resident foreigners in Spain.
What are more foreigners seeking such funding?
Another important with regard to the granting of this type of financing feature is that the economic documentation requested non-resident citizens to assess the granting of mortgage is specific to each country. Foreign clients have more supply of this type of mortgage loans are the British and the Germans, however there are many other nationalities also eligible for this form of financing.
Usually banks do not grant nonresidents financing above 80% or even 60% of the purchase price and sale of housing, which means you have to have money saved to pay expenses (which in Spain are around 10 % of the house) and 20% of the price of the property. After the outbreak of the mortgage crisis, these percentages have decreased even more, not being strange to fund only 50% of the purchase price of the property.
The reason they are stricter with this type of customer residing abroad is clear: in the event of default, it is virtually impossible to repossess goods from abroad, so the only guarantee left to the bank is the property well funded Spain.
While it is possible that the financial institution in Spain agrees to receive the scanned documents or mail, usually the presentation of the originals in person is required, as well as the signature notarized.
We also want to clarify that not confuse mortgage loans for non-residents with mortgages for foreign tax residents in Spain. Mortgages for residents in Spain, whether domestic or foreign, are normal mortgages to purchase a first or second home. Mortgages for non-residents depend on customers to pay their taxes outside Spain, not their nationality.
Apply for a mortgage as a foreigner is a process that can be complicated or difficult in some countries, but in Spain it is not so, if you follow each of the steps mentioned above, we are confident that you will achieve get financing to purchase the house of your dreams in Marbella or any upmarket area of Spain.
Drafted by: MARA
Word Count: 2047
Contribution to reader: provides customers, especially foreigners, advice regarding mortgages offered by banks to non-resident aliens, requirements and characteristics thereof, in order to advise and guide them in this process .