Mortgages in Spain and Portugal

Many Clients have enquired about possibly getting a Mortgage in Spain or Portugal and have multiple questions around this topic. So this webpage is designed to:

1. Answer some key questions about Mortgages in Spain & Portugal, and

2. Provide links (below) to Spain’s Leading Independent Mortgage Broker and one of Portugal's fastest growing Independent Mortgage Brokers from which one can quickly obtain no obligation quotes, pre approvals, and other information.


1. Q & A

Can an International (EU or non EU) and Non Resident (in Spain or Portugal) get a Mortgage on a property purchase in Spain or Portugal ?  Yes. Indeed, this category of Clients accounts for a growing and good portion of Mortgages issued in both countries. (Overall, some level of Mortgaging a property is extensively used , and continues to grow (current rate of growth of number of mortgage contracts issued issued is between 9%-10% per annum.  Likewise, the average mortgage contract value is increasing by about 4% per annum.)

What is the maximum Loan Value and Loan Period possible? Loan Value is up to 70% of property's purchase price (or the property’s valuation, whichever is lower). Loan period is typically a maximum of 25 year, as long as this period does not exceed the Client’s 75 year age point.  Most common loan period is 20 years. Different Banks may have different limits.

Affordability: What Loan amount is possible (Debt to Income ratio)? Lenders (Banks) typically look for 30% - 40% of a Client’s Net Income to not be exceeded for servicing Debts, such as Mortgages, Other Loans to be paid back and other Binding commitments.

What are current (Q3 2023) Mortgage rates in Spain and Portugal? It all depends – on many factors. But the average Variable interest rate is in the range of 4% upwards and for Fixed Interest rates around 4.75% upwards. Please note that during the last 6-12 months, the interest rates have varied quite signficantly, so one should always check on the latest available rates before making any assumptions. Central Banks are currently suggesting that the recent rate increase cycle may not have completed yet. Also that International and non-Resident Clients tend (on average) to be granted a little higher rate, as their possible lack of track record with and ‘relative remoteness to' the financial systems in Spain/Portugal, and (often) lack of Spain/Portugal or EU based assets, may indicate a slightly higher risk assessment. More importantly, South Africa's weak currency (ZAR) is relativeley unattractive to a Bank to issue a loan against with repayments based on ZAR income >> South African Mortgage applicants need to be aware of this when making applications. (NB Speak to Richard Vernon (082 570 4274) for more information on this.)

Which is better: a Variable or a Fixed Interest Rate? Again it all depends, and particularly on one’s view of future interest rate levels. In high level terms, in Spain and Portugal, it is currently an approximate 50-50 split between the two options in terms of issued Mortgages. In recent years, Variable rate mortgages were more popular, but as, amongst other things, interest rates are now relatively very low, Fixed rates have increased their share of the mortgages issued to around a 50-50 split.

Why might one consider taking a mortgage?

* Prefer not to tie up all of one’s cash in a property?

* Timing – don’t want to have to be dependent on liquidating other investments at a specific time in order to fully fund buying a property now, especially if property prices in Spain/Portugal are rising? (the current average property price increase in Spain is close to 7% per annum and higher in Portugal).

* If property prices rise over time at a rate that is at least as fast as what the cost of mortgage money is, it may be attractive to ‘gear’ one’s property investment with a mortgage. This thinking is maybe supported further if some rental income is derived from the property.


2. Getting Mortgage Information and Advice from "Mortgage Direct"

Mortgage Direct (MD) is Spain’s Leading Independent Mortgage Broker, as confirmed by Spain's main Lenders. Mortgage Direct's prime market focus is on International Property Buyers. The company also extended (in 2016) its business to cover the Portugal marketplace and is now one of the fastest growing Independent Mortgage Brokers in Portugal. Some brief background information on them is as follows:

Established in Spain in 2006 by ex UK Financial Service Professionals, Mortgage Direct works with most Banks in Spain (and now in Portugal) (and some other EU based Banks). Because of Mortgage Direct's business volumes and quality of their Client base, Mortgage Direct is able to offer preferential terms and service, which are better than the conditions offered if Clients go direct to individual banks or via other brokers.

Their openly stated value proposition for both both Spanish, Portuguese and particularly International Property Buyers includes:

* Best deals available

* Fully independent service

* Quotes within 48 hrs

* Qualified Advisors

* No obligation advice

In the case of Portugal, MD has also just been awarded the very recently introduced Bank of Portugal licence (required for being allowed to give mortgage advice in Portugal).

Whether you are looking for simply an initial indication for yourself of Mortgage availability and terms including monthly repayment amounts, or want a Pre-Approval for when purchasing a property, or want some specific advice and questions answered, you can click on their Link below:

Note: The Mortgage Direct - Spain Mortgage Link is first one, the Mortgage Direct - Portugal Link is the second one.

Disclaimer: Please note that Spain & Portugal Property South Africa (SPPSA) is not a registered Financial Services Company. Information on Mortgages that is provided here is done on a best effort basis, and SPPSA cannot be held liable for any inaccuracy of the information provided. A Visitor should always engage a registered Financial Services company that specialises in Mortgages and that is based in Spain, in order to make any enquiry around Mortgages in Spain, latest rates and lending information, and personalised quotations.