What are the requirements for a mortgage in Spain?

The eligibility requirements for a Spanish mortgage differ considerably between Dutch and Spanish banks. There are lots of requirements, but we try to bring you up to speed on the main rules of thumb regarding underwriting criteria:

Acceptance criteria for a mortgage in Spain

Dutch and Belgian people often assume that the mortgage process in Spain is the same as in NL or BE. They are often confronted with the fact that Spanish banks are quite strict. There are many criteria you have to meet. Some of these criteria are definitive (you have to meet them) and some are in a grey area. This means that while something is possible, the Spanish bank will give your case a lower priority. We walk through the main underwriting criteria, starting with your income:

Income requirements for a Spanish mortgage

First and also the most important criteria is that in Spain, a fixed monthly income (preferably from employment) must always be demonstrable. The bank must be able to see that you receive a fixed salary on a structural (monthly) basis for an extended period of time. Why? This gives security for the Spanish bank. They look at the current situation (your last pay slips) and the average of last two years (via your income tax). Income from benefits is practically never accepted by banks in Spain.

For entrepreneurs, of course, this is more difficult. Here, banks look more at your past 3 years. You need to be able to submit at least 2 complete IB returns + annual accounts. In the case of a B.V. or similar, your management fee is taken. Do you also have dividend income or box 3 income? Then you'll really need to talk to a specialist adviser (Tip: Pedro is happy to help).

Questions on income requirements:

• Can I apply for a mortgage with a temporary contract?
  You certainly can. As in NL or BE, you need a declaration of intent from your employer. In addition, the banks also look at your past 2 years through your IB. So your history also matters.
• What if I start earning more in the future?
  Banks in Spain are very conservative. They go never from future income. So not from a higher salary, nor from income from a B&B or business plan. Only your history and now matters.
• Can I take bonuses or rental income?
  Yes, you can. Bonuses may be added to your income, provided they can be shown on your IB. Income from rentals are assessed as secondary income. This is where rental income is considered minus the mortgage charges on the rental properties, but a correction is applied.

Lastly, banks also have requirements for a minimum income. Do you earn less than €2500 a month? Then few banks will be hot and we do not recommend taking out a mortgage in Spain. But income itself is not the most important thing, as you also have expenses. That is why we assume a DTI (dept-to-income ratio). More on that below!

Realise that Spanish banks get a lot of applications. The better your purchase profile and potential for the Spanish bank, the higher you will be on the list. So a bad application will take longer for the bank to consider it and the process will be more laborious.

Income threshold and DTI

In Spain, it is common that you spend a maximum of 35% of joint net income on your gross housing costs. So take into account: This means gross housing costs in the Netherlands and the housing costs of any financing abroad together. This also includes other credits, such as lease contract, credit card debt or alimony obligations.

This is Spain really a hard requirement and if this percentage is exceeded, a mortgage application in Spain is almost always rejected. We have prepared a sample calculation for you below. However, you can also calculate this yourself via our mortgage indication.

Sample calculation DTI

So you can see in this example that you are under 35%. That's great! But keep in mind that this leaves you with only 9.4% of your income for a mortgage in Spain. And that, in turn, is not that much in this case.

Equity deposit requirement

You may have read somewhere that you cannot finance 100% in Spain. Well, that's right. This is only 70%. The Spanish bank requires you to put in 30% of the purchase yourself as a non-resident of Spain. In addition, you can buyer's costs also do not co-finance. These can amount to 10-14% of the purchase price. That means the bank demands to put in a significant amount from its own funds.

Age & term requirements

A mortgage in Spain has a maximum term of 25 years for non-residents. Unlike in the Netherlands, the mortgage must be fully repaid before the age of 75. Banks in Spain like to take a big risk aversion when it comes to life expectancy. This means that an applicant aged 55 can only get a mortgage with a maximum term of 20 years as a result. The Spanish bank almost always bases the duration on the oldest person in case you purchase together.

Besides, banks in Spain will not be so quick to issue a mortgage in Spain if you are over 65, as the minimum term is 10 years, in order to spread the repayment. Intermediate repayment is also not very common in Spain, so there are sometimes penalties for this too. Something you definitely need to discuss with Pedro!

At Spanish banks, repayment is standard. Spain therefore only has an annuity mortgage form.

Testing whether you meet the requirements of the banks in Spain satisfies?

Then holapedro's mortgage indication is the solution. With this, you will be tested against the requirements and receive a comprehensive financial report detailing your mortgage options in Spain. Vamos!

Start your mortgage calculation

Or rather first consult with Pedro?

Do I meet the requirements of Spanish banks?