Bank loans in Spain

This is pretty much the same as everywhere else and you will need collateral assets and/or funds. The lavish bonanza that took place during mid-2000's is doggone and burnt! Perhaps you can take a micro-credit to buy a car or motorcycle but all subject to credit scoring. If you want to get a mortgage, for starters you will need to have at least 20% of the total and then subject to scrutiny.

Your credit history will be checked and if you have any delinquent accounts (in Spain or anywhere in Europe) - not a chance to get a loan. Also, if you have unpaid fines and/or taxes and you're resident in Spain from an EU Country and decide to leave w/o settling such - they will come after you and your delinquent status will appear in your home country! Bear in mind that European Tax Agencies have crossed databases as well as Divisions of Motor Vehicles and so on... and they'll get you!

Banks WILL ASK for your tax filling records (Spain/EU) and if you don't have such, you will not stand a chance. Nowadays people demand this document for many types of operations, ranging from home rentals to credit lines at retail stores ... 

In short, is not easy to get money from a bank.

The situation is similar to any other country in Europe. Steady employment, the correct income to loan ratio, past financial history. The current situation is very definitely linked to income tax and house taxes. Spanish law allows the taxation officials (and there are lots of types) to preferentially access your Spanish Bank Account. They can put an embargo on any amount that they wish, without you knowing about it, and directly remove cash the same month.

My Bank, Cajamar, give loans from small amounts to mortgages. If you live and work in Spain then eg a mortgage is easier and the deposit required is small. The payment period is variable and it is your decision. If you work elsewhere in the EC then 50% deposit will be necessary. I got a mortgage without the slightest problem, and I chose to pay it quickly over 9 years. This would be near impossible in many EC countries, including the UK, since their mortgage business is designed to be very long term.

In any event you will need an NIE, which is very easy to get, and can be obtained in a couple of hours in the morning. From the time that you receive your NIE you will be officially listed and then various taxes may apply to you. That is the real issue. Spanish tax officers will aggressively hunt you out.

I can definitely recommend Cajamar Bank for any services. They really are excellent and I've never had any problems with their cards anywhere in the world. That is more than I can say about UK and Swiss Banks. They will give you a free account manager, although I didn't use him for my past mortgage.

A NIE is not so easy to get... unless you're from another EU Member Country, have a Spaniard spouse or parents. Other than that you will need to have at least three years in Spain and abide to "arraigo" and other than that you're basically doomed.  In my case, I am American married to a Spaniard for almost ten years and from the moment I started to petition for my NIE until I walked out w/ the physical ID from Aluche Police Station (Extranjería) - well over four months.

Regarding loans, it all depends in the amount and location you're asking for such.  If you ask for anything above 60k (+/-) banks will ask for collateral. Here in Madrid they will not shell out money as easy.

And last but not least, it would be very handy to have a sound grasp of Spanish language before getting tangled up in banking related matters.

All that I can describe is my own experience. I am a UK/EC citizen, and people from the UK represent the largest group of extranjeros en Espana. I got an NIE sorted out in two hours in Ronda, Andalucia. I would not expect an American to be instantly given the same kind of residential status that an EC citizen enjoys. In eg Italy, Switzerland and France a US citizen would get at best 12 months temporary residence, and quite possibly not even that. Bank loans would be out of the question because there would be no right to work.

I do speak Spanish and my opinion is that any foreigner living in Spain should at least be reasonable in that language. Anyone trying to get anything done in the UK who does not speak perfect English will be totally ignored.

The request from expat.com asked specifically for a recommended bank. I have worked in Madrid, Oviedo and The Canaries, and Cajamar in all three regions has been brilliant. They are not aggressively hunting customers like other Spanish Banks. They just quietly get on with doing their job properly and efficiently. They also specialize in rural regions where most expats from the UK want to live.

As a real estate agent, I have experienced many situations of expats getting loans

What banks look into before giving a loan is the income of the applicant and assets. It is a bigger risk for the bank to give a loan to an expat, so the interest rate would be higher than that of a local  to compensate, but if an expat has a better income and assets the interest rate would be favorable.

Also the loan process would take longer than that of a non-resident, since (especially if you have a wage and assets abroad) it would take longer to clarify.

Another barrier is the language. The same bank but different branches might be different to respond. This depends on the agent processing your loan. Processing a loan requires alot of time and interaction with the client. If the agent is not that confident in communicating in english, your loan will be put on hold and process spanish speaking borrowers´loans first.

Should you need a loan in the Barcelona area contact me so that I can tell you the most expat friendly branches.

I answered the question sent out from expat directly. However, if I am truthful, I actually would not take out a mortgage and buy a house in Spain if I had my time again. Once you own a home anywhere in Spain you have entered a legal quagmire. I wish that I could have known what I now know. I would not trust any so called British /English agent. They do next to nothing for maximum return and generally are totally unqualified as anything at all. They work on a % of mortgage and insurance, and they will screw you.

The worst, ongoing problem, is that as far as the Spanish taxman is concerned you will have an appreciating income generating, cash asset. You will be taxed on an annual assumption of constantly increasing notional value. I have been taxed on an assumption of 10% increase per year for the last ten years. This is absolute fantasy because Spain has had a terrible economic slump, and I probably wouldn't get my buying price back now, let alone any profit. There are buying and selling taxes to pay and a whole list of legal requirements to fulfill in order to upgrade your new home. Of course, these also include more taxes to be allowed to remove a bathroom or kitchen and put in new ones, and a tax to increase the footprint of the place. Then you have the problem of the totally different electrical circuit requirements when you upgrade that system, together with more expenses to get a Boletin, a legal necessity to allow your newly rewired home to be hooked up to the company grid.

The best solution is to rent. You will know exactly where you are, and you can move at any time that you choose to. There are real reasons why most continentals rent rather than buying. The obsession with Home Owning (what a joke!!)  is a British disease which doesn't work in other countries.

troides

I am sure you are confused if not please explain

In spain there is a tax to pay by non residents who do not let their property.  That is imputed tax.   It is no where near 10% more like 0.2%    P.a.    If one lets there is income tax to pay. 

Imputed  tax is also payable by tax residents on all properties, in addition to their principle home, which they own worldwide

When one sells of course there is a potential capital gains tax.  If there is no increase in value then there is no GCT.  Also if the property sold is the main home and the amount for which sold is rolled over into another home It is not taxable

There can be Plus Valir tax. That is levied on value of the land upon which the property is built. (It includes apartments and is applied as a percentage).  But again if no increase in value no tax   

If one is resident, aged 65 or over and has lived in the property as their main residence for at least three years, there is no CGT

NB.  In many towns, all town hall taxes are discounted for those registered on the padron

Building work requires a licence from the town hall and of course that might mean an increase in IBI (council tax) if the property increases in value. But There is no tax liability as such

Re mortgages.  My son had a loan from a bank in spain.  That did not entail any complications as far as I recall.  The agent selling the property was not involved and my son used his own insurance company.  I paid off the loan after a couple of years. That had to be confirmed before a notary and confirmed in the the property registry office. Again probably no less straightforward than it would have been in U.K.

I hope I have clarified things

Hi,

It was a pretty long and exhausting process for me. All in Spanish also, and although I have a fairly good Spanish, it was pretty confusing at times.

I was buying a property just outside of Barcelona.

Had the following:
1.5 years of Spanish work experience
NIE
Social security number
Spanish Bank account
8 months obra y servicio type of contract (considered as temporary)
funds to pay 30% of the property selling price
funds to pay the 15% costs of the property selling price (notaria, gestoria, bank commissions etc)

They requested the following documents:
NIE
copy of DNI, passport
credit history



Was pretty tough, the process of the loan application took about two months,  because in my sector almost all companies employ you at this type of work contract and only after 2 years are they obliged by law to make you permanent, also my 8 month of history at my current company and about 1300 net salary was not considered stable enough, I got loads of rejections from different banks and financial institutions.

Finally it was my own bank, Sabadell, that said yes to a 20 year, fixed interest rate (2.5%) loan, and they required 30% downpayment. Even the best banks would not go lower than 20 %, even if there are ads about 100% financing, I think they are pretty hard to get,  especially if you are an expat, and probably the interest rates are much higher. The costs (about 15%) would still apply in all cases.

Also in my case, the 2.5 % interest rate is only applicable if I have the following payments going through the bank:
- monthly salary payments
- payment of at least 2 utility bill via direct transfer
- life insurance ( I was made to pay the full amount about 4000 EUR in advance  for the whole term of the loan)
- home insurance (about 270 per Year)

If I don't meet these requirements my interest rate goes up to 3.5 %, there is a yearly evaluation of the interest rate. In my case as I chose fixed interest rate, it can never be more than 3.5 percent.

All in all, I can say that it was pretty tough but was worth the effort.

Tuzso.   
You said

“They requested the following documents:
NIE
copy of DNI, passport
credit history”

I find that confusing

I assume you are an EU citizen if so you will have an EU Citizen Registration cert   That will of course have your NIE (your fiscal number) on it.  So you would not need to produce an NIE Certificate

A  DNI is a document issued only to spanish nationals. Do you really have one ?  If you do how did you get it ?

I am sure readers who need to obtain a mortgage would want you to clarify

Thanks

John