If you do not have a residence in Spain, how will your mortgage be?
Whether you are Spanish and you reside outside or you are a foreigner, these are the key elements to take into account when asking for a loan to buy a home
Being a resident abroad and considering the purchase of a home in Spain does not have to become an impossible mission. Although there are entities that do not grant mortgage loans to citizens who do not have residence in the national territory, many do so without major problems. What it is worth knowing, however, are the peculiarities that characterize mortgages destined to non-residents, whether of Spanish or foreign nationality. In this way, say the experts consulted, you can avoid bad surprises.
You will pay more
One of the most important elements that distinguish mortgages directed to residents with respect to those granted to non-residents is the so-called pricing, that is, the interest rate that is applied to the borrowed capital fee that must be returned each month. In the case of non-residents, it is generally higher than for residents. The fixed rate -the most common in these cases- "is around 2.5% at 20 years", says the director of the financial intermediation company Tu Solución Hipotecaria, Ricardo Gulias, and in the variable rate, the fixed part that is sum to the euribor "is between 1.1% and 1.25%". The expert underlines that these types are the lowest possible with the maximum of connection by the client, who must sign, among others, a home insurance.
The reason for applying higher rates is that non-residents allocate "financing to the acquisition of a second home and have more difficulties in meeting some links that could benefit the mortgage, such as direct debit of payroll or life insurance" , explains the director of the mortgage consultancy Ibercredit, Santiago Cruz del Pozo.
You will have a fixed rate of 20 years
The fixed rate mortgage loan is undoubtedly the most used when the buyers have residence in a foreign country. "It is the most common system outside of Spain and banks also prefer to give fixed rates, so that the quota that the client returns is constant," says Gulias. It is one more way to minimize uncertainty and reduce risk in the future. "The usual maximum duration of the mortgage for non-residents is 20 years, while for residents it can be extended up to 40 years," adds the expert.
They will finance you less
Although as a general rule the financing of a home should not exceed 80% of its value, in the case of residents in Spain it can be the whole. When the loan benefits a non-resident, however, this percentage usually does not exceed 60% or 70%, according to the experts consulted.
This occurs because, in case of default, the bank has only the property as a guarantee. "The entity has to be covered in case it has to execute the mortgage," says Cruz, who admits that the applicant's roots with Spain play an important role. "Some link of a family nature can levitate funding up to 80%," he says. In the case of expatriates, that is, Spanish citizens living abroad, the loan could cover 100% of the price of the home.
If the non-resident in Spain is a Spanish citizen, it will be possible to negotiate type, term and coverage with better conditions, "as long as they have a guarantor or co-resident in Spain," says Gulias.
You will submit a credit risk report
The economic documentation that non-residents have to present to the bank is the same as that required of the residents: work contract, payroll, tax declaration and working life. A non-resident is also often required to make a recent credit report about his economic behavior in the country where he lives and works. It is issued by organizations such as SCHUFA in Germany, Experian in the United Kingdom, Transunion in the United States or CRIF Transunion in Russia, says Cruz. In addition, the origin of the capital that the buyer contributes to the operation must be justified, in order to avoid money laundering.
You will translate the documentation
All the documentation must be translated, underlines Gulias, "and some entities also ask for the Apostille of The Hague," an annotation that is placed on a document to certify the authenticity of the signature. It can be sent by email for the bank to study, but for the signing of the contract requires the presence of the interested party or a duly empowered third party.
If the non-resident citizen who makes the purchase is a foreigner, to carry out operations with fiscal significance such as the acquisition of a home, he must also apply for a NIE (foreigner identification number) in a police station in Spain, or in an embassy or Spanish consulate.
You will pay 3% if you resell
Even if you acquire a property with a mortgage, this mere fact "will not grant residence," Gulias emphasizes, when answering the question about the consequences of buying a home in Spain. The fiscal rules that will be applied will not be different from those that apply to any resident, but non-residents "will have to declare in their country the property acquired in Spain".
The non-resident buyer must also take into account that in his case, when he sells the property, the Tax Agency will retain 3% of the value and the municipal capital gain.
Hurdles for foreigners
If you are a foreigner, you have to know that "the preferred countries for the entities are those belonging to the EU and the United States," Cruz emphasizes, although evidently "operations can be proposed with citizens of other countries." In fact, Gulias notes that "banking has specialized in recent times in operations with citizens of Eastern Europe, North and Central, and China."
People belonging to other areas, such as Africa or the Middle East or some countries in Central and South America will face more obstacles on the way to obtaining a mortgage, according to this expert, "due to issues of money laundering and compliance normative". Some factors to which Cruz adds the will, on the part of the banking entities, not to expose themselves to the risk of the exchange rate, in the event that the currency of the country of the foreign citizen is devalued, with the consequent loss of its purchasing power .
Source: El Pais / IAhorro