Until just a few years ago, we advised all our clients against borrowing money for housing in a Spanish bank. The financial situation was too uncertain and at one point there was an imminent risk that interest rates would skyrocket. The entire Spanish banking system, as far as terms and valuation of housing etc. was concerned, was also poorly regulated. Now, however, the Spanish authorities, in collaboration with the big Spanish banks, have controlled the entire banking system. Now it is advantageous and safe to borrow money from, as well as to buy a home, directly from a Spanish bank.

Q1 2024 update on interest rate hikes in Spain:

The interest rate on Spanish bank loans varies depending on a number of factors, including the term of the loan, loan-to-value ratio and creditworthiness.

Interest rates on Spanish bank loans have risen over the past year, due to rising inflation and the European Central Bank's increase in key interest rates. However, it is still possible to find relatively low interest rates on Spanish bank loans, especially if you have good credit and a high cash deposit.

If you are considering taking out a Spanish bank loan, it is important to compare different banks and loan offers to find the best option for you.

The Spanish banking association went out in March 2023 and announced that "we are among the best in Europe, maybe the whole world". As you know, it has been difficult to get a loan in Spain after the crisis that started in 2007. You have been allowed to take a maximum of 70% loan (60% in practice as you are not allowed to borrow for taxes etc.) and the amortization period is shorter than in many other countries. This restrictive behavior has paid off. Spain's inflation is not as high as in the rest of the EU and the banks are not swaying. It will also affect its housing market positively (or rather less negatively), although for a while there will be great caution, which slows down various projects on the housing market.

The ECB raised the base rate in May 2023 by just 25 basis points to 3.75%, the highest level since October 2008, but signaled a slowdown in rate hikes going forward . The 12-month Euribor in April was 3.757%, which meant that a borrower with a typical 20-year annual revolving loan of €120,000 saw their monthly costs increase by €217.

Regarding lower interest rates in Spain in the future:
In Spain, they have not been as aggressive in their appearance as, for example, the Swedish Riksbank has been in terms of interest rate increases. Concrete example: In some buildings (which extend a couple of years into the future), the margins have been increased to cover the costs of a possible interest rate increase, from the current 2.2% to 2.8% as a margin of safety.

The interest rate in the Eurozone is expected to start lowering already before the summer of 2024.

Please note that we forward and help manage applications only to our clients (ie our brokers also manage your home purchase). A valuation of a home is valid for up to 6 months. As for the bank we work with for our clients, they do n't charge for the valuation (many banks still charge from €400 and up). Note that the valuation of the home determines how much you can get in loans.

Since spring 2023, we have started working with a new large bank in Spain. Among other things, they offer much faster processing times. Our clients get quick answers to whether they get a loan or not. They send out requests to several different banks and take into account the total cost of a loan.

• When CaixaBank just before the pandemic started offering fixed interest, 20 years, at 2.10% (nominal interest, assuming the maximum discount is used or reached) this was the lowest Spanish interest rate in 30 years. A record number of Spaniards thus transferred their loans to CaixaBank. Since then, other banks have also lowered the interest rate. Then they raised it again when the ECB started raising interest rates.
• We work closely with multilingual bank managers in the organization. If you send the application through us, there are no extra fees. The advantage of going through us is, among other things, that you don't have to translate your legal and financial documents into Spanish via an authorized translator.
• The bank now also approves the mortgage before the home has been appraised.
• The bank sends out an independent appraiser to appraise the home only after signing the reservation contract, but it is also possible to order (then you pay the cost yourself) an appraisal on your own.
• They inform you of both the total cost of both the loan and the purchase of a home.
• ATTENTION! As we receive a lot of applications at the moment, we have decided that we must prioritize those who also use our broker services. 1. Write to info@spanskafastigheter.se if you want to apply for a loan. 2. Also state what type of home you are looking for and where in Spain you want to buy 3. and how much equity you have. The rest of the documents will be sent to the bank at a later date. The application costs nothing (it is only when you are so far into the loan process of buying a specific home that it must be valued by an independent third party, according to Spanish law, that a fee is added. The valuation determines how much you can borrow , but it does not necessarily reflect the actual market value).
• Of course we also give tips and advice on which areas are best for investment for rental and value increase, where you should look for housing [ see apartments in this exclusive area, Malaga , where prices have not yet increased as much as other areas) if you are out looking for as cheap a holiday home as possible, commercial properties , etc.

Swedish banks rarely agree that you have a Spanish home as collateral for a Swedish loan. The reverse relationship naturally prevails in Spain.

In this article we go through what applies to a loan in a Spanish bank, but we start with what information they want from you.

This is how you get a loan promise from a Spanish bank for home purchase

If you submit these documents before your visit, it speeds up the process and you can more or less get a loan promise before you come down to Spain. Loan commitments do not otherwise exist in Spain, but we think it is important that our clients know approximately what price range they can move in even before they come down to look at homes:

Documents requested for a loan in a Spanish bank (for Swedish customers)

• ATTENTION! It is the bank that must have these documents. Not us. We only help you establish contact with the right person.
• The tax return from the last assessment year , the full tax information so that the total gross income is shown, and also the final tax, so they can see the net income. Read more about new tax laws in Spain.
• The 2-3 most recent payslips (or pension payments) and employer's certificate (indicating the type of employment contract you have)
• Copy of ID document.
• UC : credit information about debts in Sweden and possibly remarks, they have collected a lot of valuable information for the banks at the Swedish Information Center, which, among other things, states the assessed value of properties, the declarations of the last few years, etc. Very good as a basis. Visit: www.uc.se to provide information about yourself. Often they send a PDF within 24 hours.
• Bank funds: an overview of your balance in accounts, service account, savings account, savings funds, share portfolios, etc. This is especially important for you who are asking for a large loan, but who, for example, have a lot of savings funds etc. that you do not want to use. Normally, copies of bank statements from the last three months are sufficient.
• Debts: information on the amount of unpaid debts in Sweden and how much you pay in interest and repayments per month. One of the most important aspects regarding whether or not you are granted the loan is your debt ratio . The bank only allows your total debt to amount to a certain percentage of your income (usually this calculation is based on your net income). The percentage varies from case to case but normally, for permanent residence in Spain, a debt ratio of 30-35% (up to 40% in special cases) is accepted. For foreign nationals, the accepted debt ratio is approximately 25-30%.
• Housing : the banks want to know if the customer has a leasehold or own home (and if so a valuation of the home), the cost of the rent and any debts, etc.

Are you self-employed:

• Then the banks want the tax return and the accounting (income statement and balance sheet) so they can see the basis of your income. Preferably the last two years' accounting and tax return.
• Broadly speaking, the Spanish banks, just like in Sweden, want a broad basis so they get a picture of your net income (after tax and fixed costs in the home country) and thereby be able to determine your payment capacity for a loan in Spain.
• There are no problems with borrowing money in a Spanish bank with a Swedish company. It is very common for Swedish AB companies (but also other types of companies) to borrow in Spain. However, you can get a maximum of 50 percent in mortgage loans if you take out the loan in the company.
• In addition, it is normally a shorter repayment plan that applies to businesses. This applies to both Swedish and Spanish companies.

Good to know for those who want to borrow from a Spanish bank with the help of spanskafastigheter.se

ATTENTION! As we do not receive a commission, we only help our own clients with bank contacts. We work with several Spanish banks (all have Swedish-speaking bank directors and other Swedish-speaking staff, but please note that some documents may be in English. We are happy to help if you have questions or concerns about certain terms.) This mainly concerns the large bank CaixaBank as well as Cajamar and Banco Sabadell. We only work with employees at management level. If you want to apply for a larger loan for an investment, the application procedure is slightly different. Then we organize a meeting with one of the senior managers in Barcelona.

A big advantage of the banks we have chosen to cooperate with is that they have no requirements on how little you borrow . Other Spanish options often otherwise have a requirement that you have to borrow x much of the home's sum.

We compare banks' different conditions, and come up with opinions on which bank is most suitable in your particular situation. case. We mediate and give advice in your loan process, which is a free service we offer to customers who buy their home through us, or one of our partners, or bank objects.

Are you looking for new development ? The banks have become increasingly restrictive in entering and financing projects as they believe that too much is being built in relation to demand. The uncertainty factor is thus high according to their risk departments. Instead, the banks want to see safer types of project models, such as housing cooperative . These push prices up to 35% (taking the promoter and its sky-high margins out of the equation) and are better regulated under Spanish law. The security is thus significantly higher. Read more about Spanish housing cooperative here.

Read our great article on investing in property in Spain.

Overview: the most attractive projects of new houses and apartments on the Costa del Sol and Costa Tropical.

How much can you borrow? 

Normally, you can borrow 60-70 percent of the purchase price (some bank objects up to 90%, but it is rare that you can borrow more than 70% even when buying these). Please note that you may not borrow for taxes and fees . You therefore need to pay approximately 40 percent in equity of the total sum (for a loan of, for example, 70%, you should therefore have approximately 30 percent in equity). How much you can borrow largely depends on what type of home you buy, and where it is located. If you buy an investment home in a popular area with a long history of (or good conditions for) renting, it gives you greater chances of a higher amount than if you buy a renovation object in the countryside.

The valuation of your Spanish residence is carried out by an independent third party. Before the crisis, the banks had their own valuation staff. This is no longer allowed because it ended up with the banks attracting customers with high loans and thus inflating the bubble. If the home is valued higher than the selling price (or vice versa) then that is the lowest amount you can get a loan for . For example, if the home is valued at SEK 1.2 million, but you buy it for SEK 1 million, you can borrow 60-90% of SEK 1 million.

Note. Some foreign banks (such as Danish and Swedish banks) have as a minimum requirement, right now, that you borrow at least 100,000 Euro to be granted a loan. The Spanish banks we recommend and cooperate with do not have this requirement

How high is the interest rate on a loan in Spain?

[Note that the lowest interest rate is usually obtained when the loan is committed for 20-25 years] There is individual interest rate setting, which means that your interest rate depends on a number of different factors, such as where and what you buy, your income, etc. (your risk profile). CaixaBank's average interest rate at the time of writing: Euribor + 3.8. [ The Euribor value is found here ]

The average interest rate for a loan in Spain fell from 4.21% to 3.29% from 2015-2016 and continued to fall for several years. However, it increased slightly in connection with the interest rate increases to curb inflation in the wake of the energy crisis 22.

The terms of the mortgage are covered by La Caixa's risk criteria. Loan options:

• Mortgage. With the Préstamo Hipotecario Bonificado (the subsidized mortgage loan), you provide a lump sum of the entire capital at the beginning of the deal and this is always done with the home as guarantee.
• With a mixed subsidized interest rate. During the first years, you can benefit from fixed quotas with an attractive interest rate without having to give up a variable interest rate after a few years.
• With a fixed subsidized interest rate. The security of having fixed quotas with attractive interest rates throughout the loan period.
• With variable interest. 

If you want to know in advance (if you apply for a loan promise) how high interest you can expect, the bank needs answers to the following questions:

• The price of the property you are going to buy (then we need to know in advance which property you intend to buy).
• Net income per year.
• Do you have other loans, if so how much do you pay per month?
• Do you own real estate?
• Do you have a mortgage in Sweden? How much do you pay per month on the loan?
• Do you have properties that you rent out? How much do they bring in per month?
• What is your job? How long have you been employed at your current job?
• Note. Keep in mind that it is difficult to get a loan from a Spanish bank for housing in rural areas. If you are looking for financing for rural objects, turn first and foremost to your Swedish bank.

When must you have paid off the loan in terms of age limit?

Some banks have a limit of 67 years on a mortgage loan, others are a little more generous on that point. Most have now changed the age limit to 75 years. Soon enough, all banks will be on that age limit for installments.

How long is the amortization period on a Spanish home loan? The repayment period is usually 20 years for a foreigner.

Spanish loans (as well as RUT and ROT deductions) are deductible in Sweden .

Service package for those who buy a home in Spain

CaixaBank (colloquially "La Caixa"), or HolaBank, as it was recently renamed in terms of offices aimed at the international market, offers various types of services adapted to those who have just bought a home in Spain.

This concerns, among other things:

The CaixaBank Club package with mortgage loans at the lowest possible interest rate, credit cards, car and home insurance and alarm systems for the home. Call center that is open around the clock. Legal guidance, as well as direct contact with carpenters and plumbers.

CaixaBank also offers a concept they call "Living Solutions Plan" which gives you access to help with finding domestic help (for full-time employment, or for example cleaning services), help with booking appointments with Swedish-speaking doctors, help with all the paperwork involved in a purchase of Spanish residence (as well as payment of annual taxes, etc). Read answers to frequently asked questions about buying a home in Spain.

Links to our newsletters with the best investments in different parts of the Costa del Sol:

• Newsletter Nerja
• Newsletter Marbella and the rest of the western Costa del Sol (Mijas, Fuengirola, Estepona etc)

Are you curious about your opportunities to take out a loan in a Spanish bank? Send your questions to info@spanskafastigheter.se and we will get back to you as soon as we have time.

We are only able to help those who also specify, as previously mentioned : 1. What type of accommodation you are looking for. 2. Where in Spain you are applying. 3. How much equity you have. 4. Where in the process you are (if you are on your way down to look at the place, if you are about to bid on a specific home, or if you may have planned to travel down further).