The after effects of the COVID-19 pandemic brought better conditions for applying for a mortgage in Spain. Among those there is a new program through Santander Bank. In this they let the home buyer make a down payment of only 5%.
Santander Bank is offering this important program of reduced down payment, which was formed in collaboration with ICO, the Spanish Official Credit Institution. The aim is to ease the load on personal finances among young people. Also, it is available for people who have suffered economically as a consequence from the pandemic.
The program offers the buyer to make a down payment of only 5% of the value of the property, and Santander Bank stands for the remaining 95% with a 20% guarantee from ICO.
The CEO of Group Santander, Ana Botín, means that “This collaboration between the private and public sector could potentially generate 500.000 new jobs, the construction of 150.00 new homes and it would help thousands of young people become independent by helping them buying their first home.”
Are Foreigners Able to Buy Property in Spain?
The answer is yes. Spain even encourages foreigners to invest in property whether it’s residential, commercial or land. Both residents and non-residents are welcome to buy. You will however require a financial number which can apply for with your passport at the police station.
Even if Spain allows you to purchase a property, it’s quite common that banks that are not located in Spain deny mortgage applications for buying property abroad. Although, the banks are not allowed to discriminate between EU citizen solely based on nationality. If you believe a bank is discriminating your application based on only your nationality you may turn to the bank’s complaints office and ask for an official statement of the reason for the refusal in written. Then, you contact the Financial Dispute Resolution Network FIN-NET to get advice and help. They work with resolving cross-border conflicts between banks and consumers.
Buy a Property – Get a Golden Visa
Currently, Spain offers a “golden visa” program for property owners for those who are investing €500,000 or more in Spanish property. If you buy one or more properties, you are normally automatically eligible for a residency visa. This allows you to live in Spain, primarily it’s for retirees and holiday home buyers. (The residency visa is not a work permit.)
You might want to consider applying for a mortgage at an international bank. This option might make the process slightly easier and they normally offer expat-friendly services in all locations. Here are some international banks that operate in Spain:
What About the Application Process?
The application process is preferably done on a distance, online and by phone. Because of the minimising of in-person applications, the process might take a bit longer than usual. You should be notified by the bank of how long you would have to wait for an answer.
It will not be harder or easier to get a loan due to the pandemic, the chances remain the same although naturally it still depends on personal eligibility. What could benefit the future home buyers is a slight price reduction of properties.
What About the Interest Rate?
The interest rate stays overall the same, even if it varies from bank to bank. Fixed interests for mortgages go up to 1.5% and the variable interest rates go up to 0.9%.
The banks offering lowest variable interest rates are EVO Bank, Open Bank and Bankinter. The following banks currently have the lowest fixed interest rates: BBVA, Bankinter and Open Bank. Most, if not all banks, especially in Costa del Sol, have English speaking representatives that can help you get the right information about mortgages and loans.
Which option and bank is best? Well, it all depends. Since the financial background and requirements vary from person to person, you will have to inform yourself of what applies to your situation. Although, we hope that this article can help you getting started!