Remortgage at home or Spanish mortgage: how to finance a home in Spain

If you live in the UK or Ireland and want to buy in Spain, you have two ways to finance it. You can borrow at home against the house you already own, by remortgaging or through further borrowing from your current lender, then buy in Spain as a cash buyer. Or a Spanish bank can lend to you and take a mortgage on the property you buy. Both make sense. The choice turns on what you accept to put up as security, on your deposit, on the currency you earn in and on your timetable.

Borrowing at home, then buying as a cash buyer

How it works

You raise the money in the UK or Ireland, secured on the home you own there, through a remortgage with a new lender or a further advance from the one you already have. That lender knows your income and your history, so the file starts quickly and in English. In return, it will rarely lend against a property abroad, which it could not easily repossess. The security is therefore your home in the UK or Ireland. Once the funds are released, you transfer them to Spain and buy as a cash buyer.

What your lender will look at

The extra borrowing is assessed like any mortgage at home: whether you can afford it on top of your current mortgage and other commitments, how much equity your home keeps after the new loan, and a term that usually depends on your age. On a fixed-rate deal, check whether remortgaging early would trigger an early repayment charge, and whether a further advance from your current lender would avoid it. With a large mortgage already in place, these checks quickly limit what you can add.

What you gain

• a lender you know, and a file in English;
• the position of a cash buyer in Spain, with no financing clause needed in the deposit contract (contrato de arras);
• a Spanish property free of any mortgage, which is simpler to sell later.

What you commit

• your home in the UK or Ireland as security, which puts the roof over your head on the line;
• the costs of setting up the new borrowing at home;
• an affordability assessment that counts all your borrowing, old and new.

Borrowing in Spain

How it works

The Spanish bank takes a mortgage on the property you buy. For a non-resident, it lends up to 75% of the price, calculated on the lower of the price and the valuation (tasación). The rest of the price and all the purchase costs are yours to fund.

What you gain

• your home in the UK or Ireland stays out of the security;
• Spanish law puts part of the loan costs on the bank: the notary's fees for the mortgage deed, the land registry fees for registering the mortgage and the administrative handling costs (gestoría);
• a choice between a fixed, variable or mixed rate;
• no debt-to-income ceiling written as a figure in the law: each bank applies its own criteria.

What you commit

• a larger deposit: at least 30-40% of the price plus the costs, given the usual loan-to-value for non-residents;
• a file in Spanish, with your UK or Irish documents presented in the form the bank expects;
• a Spanish bank account and your NIE before signing;
• a valuation (tasación) at your expense, and the 10-day period required by Spanish Law 5/2019 before signing: at least 10 calendar days between receiving the loan offer and signing at the notary.

Pounds or euros: the currency question

If you live in Ireland and earn in euros, this question does not arise: your income, the loan and the Spanish price are all in euros. If you earn in pounds, or in dollars, it changes the comparison.

Borrowing in pounds against your UK home

Your debt is in the currency you are paid in, so the exchange rate does not move your repayments. The currency risk sits on the day you change the pounds into euros to pay the price and the costs. After that, the value of your Spanish home in pounds moves with the exchange rate while your debt stays where it is.

A euro mortgage repaid from sterling income

The debt matches the property, which is priced in euros, but each monthly payment costs a different amount in pounds, and a weaker pound makes every payment dearer. Law 5/2019 treats a loan as a foreign-currency loan when it is in a currency other than the one in which you earn the income, or hold the assets, that will repay it (article 4.27). Article 20 then gives you the right to convert it into the currency in which you receive most of your income or hold most of your assets, at the exchange rate on the day you ask: the European Central Bank rate, unless the contract says otherwise.

The bank must inform you regularly of what you owe and of this right, and always when the amount owed or the instalments differ by more than 20% from what they would have been at the exchange rate on the day you signed. Unless the contract limits your currency risk to a movement of less than 20%, the FEIN, the standardised information sheet you receive before signing, must show what a 20% swing would do to your loan. A conversion fixes the debt in pounds at that day's rate, so any earlier fall in the pound stays with you. Ask the bank how it applies this right before you sign.

Already own in Spain? Raising money against your Spanish property

Some owners want the opposite: to release equity from a property they already own in Spain, for works, another purchase or a project at home. A Spanish bank can lend against it, with a new mortgage on a home you own outright or by refinancing your current mortgage for a larger amount. The rules are those of a purchase: Law 5/2019 covers loans secured on residential property whenever the borrower or the guarantor is an individual (article 2.1). For a new mortgage, expect a fresh valuation (tasación) at your expense and the 10-day period required by Spanish Law 5/2019 before signing, with the bank paying the notary and registration costs of the mortgage deed. How much you can raise depends on the valuation, on your income and on whether you are tax resident in Spain.

The two options side by side

How to decide

Compare the total cost of each offer: the APRC of the loan at home, the TAE (the Spanish annual percentage rate) of the Spanish one, the cost of the security on each side and the cost of changing pounds into euros. Then answer three questions. Are you prepared to put your home in the UK or Ireland up as security? Do you have a deposit covering 30-40% of the price plus the costs? In which currency do you want to owe the money? A no to the first leaves the Spanish route. A no to the second often leaves borrowing at home as the only route. The third matters if you earn in pounds: a sterling loan keeps your repayments in the currency you are paid in, and a euro loan keeps your debt in the currency of the property.

To see what a Spanish bank would lend you, run the simulator. It is free, takes 3 minutes and sends you a detailed PDF you can set against the offer from your lender at home.

Official sources

• Law 5/2019 of 15 March on real estate credit agreements (BOE): article 2.1 (scope: loans secured on residential property when the borrower or guarantor is an individual), article 4.27 (definition of a foreign-currency loan), article 14.1.e (split of the loan costs), article 14.1 (10-day period before signing) and article 20 (right to convert a foreign-currency loan, information owed by the bank).
• NIE: Royal Decree 1155/2024, article 205 and the Ministry of the Interior; no purchase or mortgage is entered in the land registry without the tax number of every party: Mortgage Law, article 254.2.