Types of Mortgages in Spain

In general terms the maximum mortgage available is up to 70% loan-to-value for non-residents and up to 80% loan-to value for Spanish tax residents. The lower of the two values between the purchase price and valuation will be the base.  This percentage can vary depending on different factors. In Spain, the maximum affordability ratio or debt-to-income is between 25% and 40%, this includes all existing debt. There are exceptional circumstances where a higher percentage can be obtained or a higher affordability ratio can be considered.

Each client and application is unique as all applicants have different circumstances and priorities, and we must take into account age, nationality, tax residence and other factors to see which are the best options at all times for each client. From personal mortgages for own investment and use to property development mortgages, the Lionsgate Capital team will help you at each and every stage of the process.

It is important to ensure the property can be mortgaged and legal advice is highly recommended (we can recommend various top law firms if required).

For each type of mortgage in Spain the rates and conditions vary between banks and also change on a regular basis. Due to the volume of transactions and our relationship with the banks and their management teams, the Lionsgate Capital team ensure they obtain the very best interest rates on your behalf, at all times.

Fixed rate vs variable rate

With variable rate mortgages in Spain, the interest rate is typically lower than that of fixed rate mortgage products. However, without warning, interest rates could increase or decrease subject to the Euribor or base rate applied.

Understanding the risk involved with variable rate is essential. Variable rate appeal to some people because the rate is calculated on a base rate (Euribor or other) and is typically lower than the fixed rate. In Spain, variable rates are generally fixed over a 12-month period and reviewed every 12 months subject to the base rate, however, there are banks we work with outside of Spain that offer other alternatives.

With a fixed rate mortgage in Spain you are able to accurately budget as the payments do not change. Although the interest rate will be slightly higher, you know what your interest rate and payment will be for a fixed length of time or for the full term of the mortgage.

Regardless of which you choose, in Spain the type of mortgage and type of interest rate generally do not change throughout the term of the mortgage so it is very important the correct decision is made right from the beginning.


Different Types of Mortgages in Spain

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Spanish resident mortgages

If you are a Spanish tax resident you have different products available and opt for a higher loan to value, of up to 80% or even 90% loan to value in some cases, depending on the valuation.

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Equity release mortgages

Equity release is not common in Spain but can be obtained for certain purposes on properties that are mortgage-free, please contact our team and we will study your individual case.

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Non tax domiciled client mortgages

If you work on yachts or do not have to declare tax on your income, we can help you find the best mortgage from over 20 lenders, with a maximum finance of up to 70% of the purchase price (or the valuation if lower).

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Lombard loans

We offer Lombard loans to our Private Banking clients, where an investment portfolio either in Spain or abroad is used as collateral to borrow funds in Spain and maximize their return on investment. Lombard loans can also be used in addition to a mortgage to maximise taxation and return on investment.

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Interest only mortgages

Interest-only mortgages are currently not available in Spain, with the exception of construction mortgages where the first 18 to 24 months can be interest only, until the property is finished. We do have some international banks we collaborate with that offer interest only options to private banking clients that hold a minimum investment of 500.000,- to 1Mio EUR with them.

If you wish to lower your monthly payment to the minimum, we always recommend you apply for the longest term possible, as some banks do offer longer terms than others.

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New-build mortgages

If you are looking to finance the build of your own home, we can also help you obtain the best option. You must have the funds to purchase the plot, together with the project and licenses in place, the architect´s plans and quotes for the build for the application process to be carried out.

In general terms, can be 60% to 70% of the total cost of the project. Different taxes and costs apply when building a home, which your lawyer or tax advisor can confirm.

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It is not common practice to remortgage in Spain. We can however review your current conditions and see if it is worth setting up a new mortgage and canceling the existing one, taking into account all costs, including the penalties for redeeming the existing one and the set-up costs for the new mortgage.

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Commercial mortgages

Whether you need financial support for a hotel, a property development or any other business, commercial mortgages vary depending on the purpose and the project. In general terms the mortgages available vary between 50% and 60% of the purchase price or valuation (the lower of the two), please contact us and our team will study your case and see which options suits best each purpose.

Financing a property development or a refurbishment with a mortgage

Financing the development of a property or a refurbishment is slightly different to a standard mortgage for a spanish property. Hence we recommend strongly to first seek advice from a financing expert company such as Lionsgate Capital prior to you starting your project. As we work with all the banks in Spain, we will be able to source and arrange the best deal for:

  • A development of a new build
  • Construction or refurbishment of a holiday home
  • Construction of a permanent home in Spain (especially Mallorca, Ibiza or Menorca)
  • Refurbishment projects of a property
  • Equity release on an existing property to develop or refurbish another

Our team can source finance for a percentage of the entire costs of your building project (including purchase price of the plot and construction costs). We will negotiate the best conditions for you with the banks.

We look forward to offering you financing options for your new build or development, please contact us for a free consultation.

Please note: The information the banks provide us with changes frequently and we aim to update the information accordingly. If you have any queries at all, please contact our team, thank you.

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Lionsgate Capital is regulated by the Bank of Spain and is included in the Bank of Spain's register of real estate credits intermediaries with ID Number D270.

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