Joshua Parfitt
“How can I get a 100% Spanish mortgage” – it’s a question we’re used to.
As a leading real estate agency in Javea and surrounding Costa Blanca North, we at Blanca International find foreign buyers most interested in a 100% mortgage in Spain.
This is for one main reason: after Spain’s 2008 financial crash most Spanish banks halted 100% mortgages completely. Spanish buyers know this and expect to receive the typical mortgage up to 80% of a property purchase price.
But after BBVA started up 100% Spanish mortgages in 2018 other banks have followed suit. Around 1 in 11 mortgages signed in Spain in 2021 were for more than 80% of the purchase price according to the Bank of Spain.
Read on to find out how you can get a 100% Spanish mortgage.
How to get a 100% Spanish mortgage
There are two main reasons Spanish banks are wary of offering 100% mortgages.
Firstly, if the buyer can’t afford the usual 20% deposit there’s a higher risk they will default on the 100% mortgage. Secondly, the higher monthly repayments, fewer deals on offer and sometimes additional Mortgage Indemnity Guarantees make it more likely a buyer won’t take up a 100% mortgage plan in Spain.
That’s why the 100% Spanish mortgage is generally confined to the following situations:
- If the house you’re buying is owned by a bank
- If the buyer is a civil servant
- If you can demonstrate high stability in your work
- If you can demonstrate a high level of solvency in your finances
- If the buyer is under 35 and his/her parents can provide collateral
According to guidelines from the Bank of Spain, a buyer should not dedicate more than 35% of their net monthly income to mortgage repayments. Net monthly income is therefore a key figure in order to demonstrate sufficient solvency for a loan above 80% and up to 100% (bear in mind that 90% mortgages are also available in these situations).
As many Spanish banks do not publicide 100% mortgages, you may need a mortgage broker in order to request and compare deals.
You can find properties for sale owned by Spanish banks at leading property portal Idealista, at the dedicated Inmobiliaria Bancaria or directly through a bank’s website like at Santander. Many times properties owned by Spanish banks go on auction – you can find these here at Alerta Subastas.
If you are seeking a mortgage as a foreigner (you do not have residency in Spain) the steps can be harder to receive even a regular mortgage. Read this guide from WeRelocatetBCN for tips on mortgages for non-residents in Spain.
Beware: the downsides of a 100% mortgage in Spain
According to JustLanded.com, nearly all the properties advertised as coming with a 100% mortgage in Spain will have been repossessed by banks from developers who went bankrupt. This could have been to cash-flow problems, but also could have been because the property couldn’t attract renters.
If the property can’t attract renters it could be because it’s poorly located or in a state of disrepair.
More alarmingly, many times properties in the possession of banks in Spain may have attracted squatters (read about the laws concerning squatters in Spain here).
The network of chartered surveyors at Survey Spain say many times a property with a 100% mortgage ends up being a ‘terrible investment’ that Spanish buyers won’t touch.
The above reasons make it a wiser choice to find the house you wish to buy first, and then contract the services of a mortgage broker to try and obtain a 100% Spanish mortgage (read this blog from Mortgage Direct for more info).
If you’re looking to buy a house in Javea and/or Costa Blanca North, you can find exclusive and high-end properties at Blanca International.
You can find out more about the taxes and process involved in obtaining a Spanish mortgage on our dedicated article here.
