New regulations in the Spanish mortgage market

March 2, 2020 | Blog, Home & Relocation

Since 2006 Mortgage Direct have been liaising with banks, estate agents and international property buyers in Spain’s ever-changing mortgage market. They have adapted their independent service to the needs of property buyers and they continue to negotiate with the banks to provide their clients with preferential deals both in terms of interest rates and speed of completion. Co-founder Kevin Monger has written about the changes in the Spanish mortgage market which were implemented in 2019 and the exclusive mortgage conditions Mortgage Direct can offer their clients.

The need to know guide

New regulations


Since the Spanish mortgage market became regulated for the first time in 2019, banks have been reviewing the mortgage conditions they offer. Now that things have settled down, it’s clear that there are still some very attractive deals available. One of the more significant changes from the new regulations is a rule where clients who do not earn in Euros can now convert their mortgages to their home currencies if that currency falls by more than 20% against the Euro after they sign the mortgage. This has led to many banks changing their lending criteria for and what they offer to those not earning in Euros. 

The best mortgage deals around


It’s important to point out that in most EU countries there are set mortgage conditions for each particular product and these are usually non-negotiable, but here in Spain bank branches currently still exercise some discretion over the final terms, so in other words there is some flexibility.


As a result of the flexibility they have, we find that that conditions can vary not only from bank to bank, but also from branch to branch within the same bank. As an independent broker, we have spent more than 14 years working closely with the banks here in Spain and a big part of what we do is to negotiate exclusive conditions for our clients. When we talk about the best deals available, we are talking about conditions we ourselves arrange through our own contacts at each lender.

Loan amounts


For non-residents, the best deals in terms of maximum borrowing are those where applicants can borrow 70% of the purchase price (or valuation if lower). For fiscal residents, it is possible to borrow up to 80%.



Immediately following introduction of the new mortgage regulations, most lenders have increased interest rates on their products. Since then, as they have become more familiar with the requirements of the new law and competition has grown, rates have become more competitive again. In addition, it has become cheaper for banks to borrow money on the international money markets, which has also allowed them to reduce rates they offer to borrowers.


The rates quoted below are available currently, but always ask us for up-to-date rates when you come to apply. We may not always be able to confirm the exact rates that will apply, but we can give you a very good idea.


Banks in Spain offer fixed or variable rate mortgages, with one or two also offering mixed rates. We find that the majority of our clients are requesting fixed rate mortgages, unless they plan to pay off the mortgage early, in which case they might opt for variable.


Terms (in years)


The maximum term in years is 30 years with a couple of the lenders, but the majority will not lend for more than 25 years and, in some cases, they actually prefer that the term does not extend beyond 20 years.


The maximum age is generally up to age 75, but some banks prefer not to lend past age 70, unless clients have clear proof of pension income beyond this age. There are a couple of banks that will consider lending to age 80, but only in exceptional circumstances.

Best deals


The best fixed rate deals we can currently offer to our clients are as follows:

Best fixed-rate deal 1

  • 70% of purchase price (or valuation if lower)
  • 1.95% fixed for up to 30 years
  • 0% opening commission
  • No life cover required
  • Home cover required
  • 0% early redemption penalties

Best fixed-rate deal 2

  • 70% or purchase price (or valuation if lower)
  • 1.95% fixed for 20 years
  • 1% opening commission
  • Life cover may be required depending on country of fiscal residence
  • Home cover required
  • 0% early redemption penalties in exceptional cases for premium clients, otherwise standard penalties apply

Best fixed-rate deal 3

  • 70% of purchase price (or valuation if lower) 
  • 2.75% fixed for 25 years
  • 0% opening commission
  • No life cover required
  • Home cover required
  • 0% early redemption penalties

Best variable-rate deal 

  • 70% of purchase price (or valuation if lower)
  • Euribor + 1.5%
  • 1% opening commission
  • No life cover required
  • Home cover required
  • 0% early redemption penalties


These are all deals we have arranged for our clients in the last few months. For each deal, the lender will have their own specific lending criteria, so first we ask clients what their requirements are and then make an initial assessment on whether they will qualify for the deal that best matches them.

Life insurance


One of the main things we find is that clients do not wish to take out new life cover policies, but some lenders are still insisting that clients contract a new life policy through their chosen insurers. There are other lenders who increase the rate significantly if the applicants choose not to take a new life cover policy through the lender. In the last few years, more lenders have entered the market offering mortgages without life cover, but they tend to be more conservative in terms of their general criteria for lending. 


Where possible we always try to recommend products where life cover is not required.

Bank opening commission


Most banks in Spain charge what is called an opening commission. This is a one-off fee they charge the client as part of the set-up costs of the mortgage. It is not to do with opening the bank account, which is a common misconception, but simply a fee for arranging the mortgage. Some lenders are now offering fee-free mortgages, but they are usually very conservative in the way they decide whether to approve the mortgage.

We work with all lenders, so we look at the best products, but also the lenders most likely to approve a client’s financial profile. 

Early redemption penalties


Under the new regulations, the early repayment penalties have changed. The maximum penalties are now based on whether the lender has suffered a loss when the client redeems the mortgage early, whether this is partially or fully. For fixed rate mortgages, the maximum penalty is 2% in the first 10 years and 1.5% thereafter.


For variable rate mortgages, or the variable period of a mixed rate mortgage, the maximum penalties can be either (not both) of the following:

– In first 5 years, up to 0.15% of the amount paid early, or

– In first 3 years, up to 0.25%.

Premium clients


Banks have different criteria for deciding who qualifies as a premium client. More often than not it relates to income and how much the clients earn each month. Sometimes, it can be a combination of this and also the overall quality of the profile. We can advise on this when we are carrying out the initial fact find. Banks sometimes offer even better rates and/or other conditions for premium clients.


We offer a free no-obligation initial assessment, if you wish to discuss mortgage options for Spain (or Portugal).  We can agree a convenient time and call you to go through your requirements and give you our expert opinion on what products we believe best suit them. All our advisers hold the new Spanish mortgage qualification and have the benefit of many years experience in the sector.


We look forward to hearing from you.

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