In Spain, anyone has the right to buy real estate, including foreigners from anywhere in the world. Citizens of Russia and the former CIS countries can also take advantage of this right. Foreigners can also obtain mortgages to purchase Spanish property.
To take or not to take a loan?
Of course, if you have enough of your own funds to purchase an apartment or house, you may well be able to do without a loan. However, it can be a good idea to obtain one for a variety of reasons. For example, to complete the transaction, you must always prove the origin of the funds you will need to transfer to Spain. You might also be able to document only a portion of your available funds. Or you might not want to risk investing all your available funds in foreign real estate at once. Regardless, obtaining a loan from a Spanish bank is quite affordable, and we can assist you with this. Please note that when purchasing real estate with a mortgage, your overall transaction costs will increase by 2-3%, as in addition to the required loan origination fee, you will also need to pay for the notarization and registration of the mortgage agreement. These documents are prepared separately from the purchase agreement.
Mortgages in Spain are typically granted for up to 60% of the property's value, which will serve as collateral for the loan. Mortgages for non-residents of Spain are granted for terms of up to 25 years with the option of early repayment with minimal penalties, and even these penalties can be easily avoided. Mortgage interest rates have recently fluctuated between 2.85% and 3.25% per annum.
How to get a mortgage?
Typically, reputable real estate agencies and lawyers handling the transaction assist with obtaining a mortgage. The buyer declares their desire for a loan and the possible loan amount, and lawyers (or agents) forward the necessary information to several banks. This information primarily concerns the property being purchased, its price and location, as well as the buyer themselves.
It should be noted right away that not all banks have the same policy when selecting borrowers. Some, depending on the province and zone, strictly refuse to deal with clients who are not citizens or residents of the European Union. However, many financial institutions are quite lenient towards buyers from Russia and the former CIS, are knowledgeable about working with them, and offer competitive lending terms—subject, of course, to documents confirming the legal origin of the funds, which should ultimately be deposited into bank accounts in Spain. After all, the bank only provides a portion of the transaction funds; the buyer pays the rest.
Thus, once the buyer has made a deposit to reserve the property, the verification and document preparation period begins: lawyers check the property you have chosen for the absence of any issues that could hinder the transaction, and the recommended banks request and also verify the buyer's financial documents.
In recent years, and for quite some time now, the authorities of Spain, like those of other EU countries, Russia, and the CIS, have been combating money laundering through real estate purchases. Therefore, it is particularly important to ensure that funds for the transaction are transferred from one account to another correctly, in accordance with the law. The key here is to avoid transferring funds to Spain from third-party foreign accounts. Ideally, funds should come from the buyer's personal accounts. And, of course, banks do not permit any offshore schemes.
To obtain a loan in Spain, each adult buyer will need to provide several documents in Russian. These documents will need to be translated by a sworn translator in Spain. One of the most important documents is a certificate of employment from the applicant's place of work, confirming their income. This certificate must be on company letterhead, signed by the manager and accountant, bearing the company seal, indicating the applicant's position, length of service, and income in rubles or the currency of the country where the applicant resides. The combined income of all buyers must be approximately four times the monthly loan payment. It will also be important to provide tax returns and bank statements from your home country. Your lawyer will advise you and assist you in preparing the necessary documents
Normally, the bank will review the documents and make a decision within 4-5 weeks from the date the applicant submits them. The bank will offer its own terms for loan repayment; if several banks have responded positively, the client can choose the best terms from those offered.
The lending bank opens an account for the buyer, from which it debits the monthly mortgage payments and conveniently pays the maintenance and upkeep costs of your property. The loan price typically includes homeowners' insurance and life insurance for the buyer. Therefore, the bank takes absolutely no risk by issuing mortgages to well-vetted clients.
Mortgage Payment and Borrower Liability.
The mortgage is repaid in monthly installments from your bank account. If there are insufficient funds in the account on the due date to cover the monthly installment, the bank will be forced to charge interest on the late payment (penalty). If you fail to make your mortgage payments for six months or more, the bank will inevitably go to court and ultimately foreclose on your property. This is a fairly lengthy process, but the Spanish courts are very assertive, and if you fail to repay your debt to the bank on time, you will lose everything you've already paid. Therefore, please note that a mortgage in Spain not only offers significant advantages when purchasing Spanish property, but also imposes serious obligations.
In turn, maintaining a good credit history with your bank can greatly impact your future relationships with it and other banks: you never know how life might turn out, or when you might need a different type of loan or financial assistance. It's worth noting that reputable Spanish banks don't abandon their clients in difficult situations and can prove to be very helpful partners.
