The Spanish mortgage industry has a troubled and shadowy past (I’m sure you are starting to notice a theme by now!). Before the financial crash of 2008, the market was characterised by questionable practices that led to severe consequences for many borrowers and the economy as a whole. Dodgy property valuations, poor financial checks on borrowers, and the prevalence of unlicensed brokers and large introduction fees were just a few of the issues that plagued the industry during this period.

In the years since the crash, the Spanish mortgage market has undergone significant changes. Increased regulation and control have helped to improve practices and transparency within the industry. Lenders are now subject to stricter oversight, and there is a greater emphasis on responsible lending practices. As a result, the market has become more stable and more transparent compared to its pre-crash state.

Despite these positive changes, there are still potential issues that buyers should be aware of when seeking a mortgage in Spain. The greed, recklessness and outright dishonesty within the banking sector did not miraculously disappear - of course that’s fair to say of all banking systems around the world - it merely became more tightly regulated. As such, it is crucial for those considering a Spanish mortgage to proceed with caution and be well-informed about the process and potential pitfalls.

All in all, the range of mortgage products available in Spain is much simpler that can be found in other countries, it can be tempting therefore to assume that, as most offerings are very similar, you should take the easy route and go with the bank that your estate agent recommends to you. As we will see, this is often not the wisest route to take. The market is also becoming increasingly competitive and with that, mortgage products are becoming more advanced, it’s also the case that once a mortgage has been secured against a property it is not as easy to change providers or remortgage in Spain as it is in some other more advanced mortgage markets. With all that in mind, it is most definitely worth weighing up several options and seeking out the best match for your individual circumstances.

In this chapter I will give an overview of the Spanish mortgage market and the key characteristics of mortgages in Spain. I will begin by examining the historical context of the industry, including the questionable practices that were prevalent before the crash and their consequences. From there, we will explore the current state of the market, including typical loan-to-value ratios, mortgage terms, and the differences between the terms available to residents and non-residents.

We will also discuss the role of mortgage brokers in Spain, comparing traditional brokers with the emerging digital platforms. Additionally, we will cover the specific requirements and processes involved in securing mortgages for a new build property in Spain and give a brief overview of self-build financing and bridging finance.

Finally, we will guide you through the mortgage application process explaining the paperwork and financial information that you would need to provide when making a mortgage application . By the end of this chapter, you will have a broad understanding of Spanish mortgages and be well-equipped to navigate the market with confidence.