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.