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Spanish Home Mortgage Update

I just got back from a meeting with my banker at Caixabank. In summary, I won’t be going ahead with the mortgage. I’ll explain why below.

I initially applied for a mortgage since foreigners in Spain can get mortgages rather easily. The cost of the flat was €90,000 and banks offer either fixed or variable rates with around 20% of a down payment.

Initial Application

To summarize, I applied for a mortgage at Caixabank sometime early May 2019. It’s now early July and I’ve decided to forgo the mortgage and go with cash.

My banker said that it shouldn’t be a problem at all even if I didn’t have a residency card. Of course I did have a residency card but she said we wouldn’t need it. The passport would suffice.

Higher Down Payment

After a month she emailed me back and said that they wouldn’t be able to approve a non-residency mortgage with only 20% down.

She asked if I could put down 50%. Sure. So she started processing the application with a 50% down payment. She requested all of my supporting documents.

Residency Account Needed

We kept exchanging emails and I sent her all of my bank statements, income taxes from the US, business licenses, etc.

She then called me back in and told me that we’d need to proceed with a residency account since a non-residency mortgage would take a very long time.

Sure. So I hand her my residency card which was expiring in 2 weeks. She said she couldn’t accept that and that it would be best to go back to the non-residency mortgage.

She ran my application again and said that it would be very difficult or impossible to offer me a mortgage with a non-residency bank. And that it would be best to renew my residency card (my TIE) and apply with that.

The Runaround

Now, these are normal things even in the US – dealing with applications and underwriting and pre-approvals. However, this kind of superficial back and forth was a bit of a time waster for me.

I learned a lot, so I got no beef with the bank or my banker. However we wasted a lot of time doing nothing. As a bank they should have had a good sense of what can and can’t get approved.

From what I have heard, Spain’s economic systems are a bit like the DMV in the US, circa 1990’s. Still, I managed to get my non-lucrative visa here and open a bank account rather easily.

Getting a Mortgage

The reason I am writing all this in a blog post is because it should be helpful for someone else who opts for a mortgage. Of course, this is just my experience. I’m sure others will have no trouble getting a mortgage maybe from another bank or a different banker.

If I persevered and waited to renew my residency permit and reapplied, I would likely get the mortgage with 20% down.

The rates I was offered were around 2.5% for a fixed 10-year mortgage. The payment would be €480/month with a 50% down payment. Not bad. But I’m just as comfortable paying cash and not dealing with a mortgage.

The Experience

I gotta say that I really enjoyed this process. In a sadistic way, it was fascinating learning about how banking works in Spain. How mortgages are approved. And what the interaction is like between banker and customer.

In retrospect, I would have applied for a mortgage at multiple banks. I did contact several banks but didn’t fully follow-up with them.

But there is something very pure about buying your home in cash. I purchased my Portland condo in cash and not having a mortgage and not having to jump through the hoops of getting a mortgage was well worth giving up that liquidity.

2 replies on “Spanish Home Mortgage Update”

Seems like the easiest option. I might ask the seller if she wants to do seller financing but she mentioned that she prefers to have the cash since that’s how she bought her house in the first place 10 years ago. Cahs is easy, that’s the upside. The math just doesn’t make a lot of sense – I can rent a similar place from the passive income of my investment portfolio. So, cashing it in to buy it in cash is a counterintuitive strategy.

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