Property Financing in Spain: How to Buy Your Home and Get the Best Mortgage

Buying a home is, without a doubt, one of the most important financial decisions in life. Financing is a key element in this process, as it enables many buyers to access the property of their dreams without needing to have the entire capital available immediately. In this blog, we explain in detail how property financing in Spain works, what options you have, and what requirements and steps you need to follow to secure the ideal mortgage. At GR Estates we have our team of property experts ready to advise you in the best possible way this 2025.

Financing Options in Spain

Mortgages: The Most Common Option

Most property purchases are financed through mortgages. These are long-term credit lines that allow the purchase price of the property to be paid in monthly instalments. Among the most common types of mortgages in Spain, the following stand out:

• Fixed-rate mortgage: The instalment remains constant throughout the life of the loan, offering stability and predictability in payments.
• Variable-rate mortgage: The instalment is adjusted according to a reference index (usually the Euribor), which can result in lower initial payments, albeit with some risk of fluctuation.
• Mixed mortgage: Combines an initial fixed-rate period with a subsequent switch to a variable rate, offering a balance between stability and potential savings.

Financing for Residents and Non-Residents

The requirements and conditions may vary depending on whether the buyers are residents or non-residents.

• Residents: They usually have access to higher financing percentages (up to 80% or 85% of the appraisal value) and more favourable interest rate conditions.
• Non-residents: They can generally finance around 60%-70% of the property's value, as they are considered to have a slightly higher risk profile.

Requirements to Obtain a Mortgage

Each financial institution will assess your ability to pay and creditworthiness before granting a mortgage. Among the most common requirements are:

• Personal Documentation:

  • Passport or ID card.
  • Registration certificate (for residents).
  • Proof of income: payslips, tax return or bank statements.
  • Credit history, in some cases.

• Property-related Documentation:

  • Reservation contract (earnest money agreement).
  • An appraisal carried out by an accredited expert, which will determine the market value of the property.

• Down Payment:

  • The deposit usually ranges between 15% and 40% of the property's value, depending on whether you are a resident or not, and on the risk profile assessed by the financial institution.

The Mortgage Application Process: Step by Step

1. Comparison and Selection of the Bank: Research and compare the offers of different banks. The conditions can vary significantly in terms of interest, fees, terms and repayment flexibility.

2. Application and Submission of Documentation: Once you have chosen a bank, you must submit the required documentation. It is advisable to have a financial or mortgage advisor to help you prepare everything properly.

3. Property Appraisal: The bank will request an appraisal to confirm the actual value of the property. This step is crucial as it will influence the percentage of financing offered to you.

4. Evaluation and Approval: With the documentation and the appraisal in hand, the bank will assess your ability to pay and the risk associated with the operation. This process may take a few weeks.

5. Mortgage Signing: Once the financing has been approved, the mortgage contract is signed before a notary and subsequently registered in the Property Register.

Legal and Fiscal Aspects to Consider

Associated Taxes and Expenses

Purchasing a property involves certain additional costs that you should take into account:

• Property Transfer Tax (ITP) or VAT: In the second-hand market, the ITP is applied, whereas for new builds VAT is usually paid.
• Notary and Registration Fees: These are unavoidable costs in the process of formalising the mortgage.
• Bank Fees: Some institutions apply fees for opening, processing and early cancellation, so it is advisable to carefully read all the contract clauses.

Mortgage-Linked Insurances

Generally, banks require the purchase of life or home insurance as an additional guarantee. These insurances may represent an extra cost, but they offer greater protection against unforeseen events.

Tips for Successful Financing

• Negotiate the Conditions: Do not hesitate to compare offers and negotiate not only the interest rate, but also the fees and conditions for early repayment.

• Plan Your Budget: Assess your actual payment capacity and consider both the monthly instalment and the additional costs associated with the purchase.

• Consult an Expert: A mortgage or financial advisor specialised in the Spanish market can provide you with valuable information and help you choose the best option according to your profile and needs.

• Check the Fine Print: Before signing, make sure you understand all the contract clauses to avoid any future surprises.

Property financing in Spain for the purchase of a property is a complex process but manageable with the right information and guidance. Knowing the available options, meeting the requirements and planning each step will allow you to make informed and secure decisions. If you are thinking of buying a property on the Costa del Sol or in any other region of Spain, having a team of experts can make all the difference. At GR Estates we are committed to helping you at every stage of the process, from finding the perfect property to securing the ideal financing.

Do you have any questions or need personalised advice? Do not hesitate to get in touch with us and discover how we can help you make the dream of owning your home in Spain a reality! We are just a WhatsApp away. 

The GR Estates Team