Mortgages in Spain for European Union citizens: a practical guide with a special focus on customers from Poland

Property purchases in Spain by European Union citizens are steadily increasing, particularly among buyers from Poland who are looking for both second homes and investment opportunities, as well as a place to live after retirement.

Obtaining a mortgage in Spain is possible for this group, but it requires proper preparation and an understanding of the criteria used by Spanish banks.

First, it is important to emphasize one key point: the approval of a mortgage depends primarily not on the property itself, but on the applicant’s financial profile. That is why a thorough analysis of the applicant’s financial situation is the most critical step in the entire process.

Before submitting an application, it is necessary to conduct a detailed assessment of your creditworthiness, including your net income, fixed expenses, existing financial obligations, and your actual ability to save.

For Polish citizens, another important step is obtaining a BIK report, which details their credit history in Poland. This document is crucial because Spanish banks use it to assess a customer’s financial reliability.

European Union citizens can apply for a mortgage in Spain whether they are residents or working in other EU countries—and beyond.

It should be noted, however, that financing terms vary significantly depending on residency status. For non-residents, banks typically finance a maximum of 60% to 70% of the property’s value, using the lower of the purchase price or the appraiser’s valuation. In one of the analyzed simulations, a property valued at €480,000 could be financed up to €336,000, or 70% of its value.

In this case, you need to have the difference—that is, 30%—and on top of that, you must add a 10% tax calculated on the total purchase amount, In this case, that would amount to 48,000 euros (ITP—impuesto de transmisiones patrimoniales—property transfer tax). And, of course, you must add the notary fees, the Land Registry entry, the transfer of utilities, and the notification to the authorities of the change to the new owner—which amounts to an additional 1.5%–3% , depending on whether you handle the three notifications to the authorities yourself or hire a service to do so.

Do non-residents in Spain pay an additional 1.5% when purchasing real estate?

Among European Union citizens, and particularly among clients from Poland, there is a common misconception that non-tax residents of Spain must pay an additional 1.5% tax when purchasing real estate. In practice, this is a simplification that can lead to misunderstandings.

In the Spanish tax system, there is no separate 1.5% tax applicable exclusively to non-residents. This rate most often applies to the stamp tax, known as AJD (Actos Jurídicos Documentados), which applies to certain real estate transactions.

The AJD tax applies primarily when purchasing real estate on the primary market, i.e., directly from a developer. In such cases, the buyer pays 10% VAT (IVA) plus the AJD, which typically ranges from 1% to 1.5% depending on the region. For example, in the Valencian Community, the rate is 1.5%.

The required documentation is extensive and is intended to thoroughly assess the customer’s creditworthiness. Typically, banks require tax returns for the past two years (PIT), the last three pay stubs, proof of additional sources of income (e.g., rent, commissions), current bank statements, and information on all existing financial obligations. Based on this data, the financial institution calculates the debt-to-income ratio and the maximum monthly payment the customer can safely afford, i.e., their creditworthiness.

Banks generally follow the rule that a mortgage payment should not exceed 30%–40% of net income. This ratio directly affects the maximum loan amount that can be obtained.

Another important factor is the loan term. In Spain, the minimum loan term is usually around 10 years, while the maximum can reach 25–30 years, depending on the borrower’s age. However, it is important to keep in mind a key restriction: the final loan payment cannot fall after the borrower turns 75. Therefore, a 60-year-old will not be able to take out a 25-year loan, as the loan term must be shortened accordingly.

When it comes to interest rates, there are mainly two options available on the market: fixed and variable rates. A fixed rate ensures that your monthly payment remains the same throughout the entire loan term, providing greater stability and predictability. Variable interest rates are typically tied to the Euribor index and may change over time, which involves greater risk but sometimes also lower initial costs.

Special attention should be paid to the terms and conditions for early loan repayment. Some banks allow repayment without additional costs, while others charge a fee, which may be, for example, 2% in the first years of the loan and 1.5% in subsequent years. This factor, often underestimated, can significantly affect the total cost of financing. In summary, European Union citizens—and Polish customers in particular—have real access to mortgages in Spain.

However, proper preparation, complete documentation, and a thoughtful approach to the financial terms are essential.

The most important thing isn’t simply getting a mortgage, but securing one on the right terms—terms that are safe and tailored to the borrower’s actual financial situation. (I can check your creditworthiness if you’re interested.)