Non-resident mortgages on a new build in Spain

Spanish banks publish lower loan-to-value limits for non-residents than for residents. Broker and law-firm guides consistently put non-resident lending at around 60% to 70% of the value, with exceptions; residents can often borrow up to 80%. Some lenders go lower when your income is in a currency other than the euro.

The percentage is generally applied to the lower of the purchase price and the bank's valuation. On top of the 30% to 40% deposit, you also need to fund the taxes and fees, which are not financed. Banks also look at your income, existing debts and credit history in your country of residence.

On an Off-plan purchase, the mortgage is signed together with the title deed at completion, and the bank pays the balance to the developer on that day. The stage payments before completion, protected by the bank guarantee, come from your own funds.

• Early on: ask a bank or broker for an indication of what you could borrow, so the payment plan fits your finances. It is not a commitment.
• Close to completion: the bank values the finished home, assesses your application and issues its binding offer.
• Plan for a gap: if the valuation comes in below the price, or the bank lends less than you expected, the difference is yours to fund. Keep a margin.

If your income is outside the euro, the balance you need at completion also depends on the exchange rate. See currency risk on stage payments.

Mortgage valuations can only be made by appraisal companies approved and supervised by the Banco de España. Because you pay for it, you can choose among approved appraisers, and a valuation is valid for six months from its issue. If one bank turns you down, it must return the valuation, which you can use with another lender while it is valid.

Spain's 2019 mortgage law (Ley 5/2019) applies to loans to individuals secured on residential property and sets out who pays the costs of setting up the mortgage:

• Ten days to read: the bank must give you the binding offer (FEIN) and the other pre-contract documents at least ten calendar days before you sign.
• A meeting with the notary: before signing, you attend the notary, who checks you have received the documents and answers your questions. Without this record the mortgage deed cannot be signed. You can grant a power of attorney if you cannot travel; your lawyer will advise how this step is handled.
• Insurance: the bank can require damage insurance on the home, but it must accept a policy from another insurer with equivalent cover, without charging you or worsening the loan terms. A rate discount for taking the bank's products is common; compare the total cost.
• Loans in another currency: if you borrow in a currency other than the euro, the law gives you the right to convert the loan to the currency of most of your income or of the EU country where you live.