Spanish mortgages for non-residents: Euribor, the bank's margin and currency

You often hear that mortgages are cheap in Spain. For buyers who live abroad the picture is more mixed: the rate depends on Euribor and the bank's margin, the terms are stricter for non-residents, and if you earn in pounds or another currency, the exchange rate plays its part too.

What sets the rate?

A variable-rate mortgage in Spain is usually priced as 12-month Euribor plus the bank's margin (diferencial), which is fixed in your contract. The rate is reviewed once a year or every six months. Euribor averaged 3.247 per cent in September 2026, about 1.1 percentage points higher than a year earlier. With a margin of, say, one point, you pay around 4.25 per cent.

Many banks also offer a fixed rate, or a mixed rate that is fixed for the first years and then follows Euribor. That gives predictability, but a fixed rate usually starts higher than a variable one.

Stricter terms when you do not live in Spain

If you do not live in Spain permanently, the bank treats you as a non-resident. In our experience, that normally means:

• Lower loan-to-value: usually up to 60-70 per cent of the purchase price or the bank's valuation, whichever is lower.
• Shorter term: often around 20 years, and the loan usually has to be repaid by about age 75.
• More of your own money: on top of the remaining 30-40 per cent of the price come the purchase costs, such as taxes, notary and Land Registry fees.
• Paperwork: an NIE (foreigner's identification number), a Spanish bank account, payslips or proof of pension, tax returns and bank statements.

What Spanish law gives you

The mortgage credit law, Law 5/2019, protects you whether you live in Spain or not:

• Time to read: the bank must give you the European Standardised Information Sheet (FEIN), a binding offer, and the other loan documents at least ten calendar days before you sign.
• A free session with the notary: by the day before signing at the latest, a notary of your choice goes through the terms with you. This costs you nothing in notary fees.
• Who pays what: the bank pays the notary for the mortgage deed, the Land Registry and the processing agency (gestoría). You pay the valuation (tasación).
• No floor: a variable rate cannot have a minimum rate (cláusula suelo).

Borrowing in euros when you earn in pounds

The home in Spain is a euro asset: it is valued and normally sold in euros. With a home worth 500,000 euros and a 250,000-euro mortgage, value and debt are in the same currency, and if you sell, the euros can go straight to paying off the loan. Only your own equity moves with the pound.

The currency risk does not disappear, though. If your salary or pension is in pounds, each monthly payment costs you more when the pound weakens, and less when it strengthens.

Spanish law treats a loan in a currency other than the one you earn in as a foreign-currency loan. You can then ask to convert it into your income currency, the bank must warn you if what you owe or pay moves more than 20 per cent because of the exchange rate, and unless the contract limits the risk, the FEIN must show what a 20 per cent swing would mean. Converting comes at a cost, the Banco de España points out. More in When the home is priced in euros and your income is in pounds.

Three questions to ask yourself

Not just ‘where is the rate lowest?’, but also:

• Which currency is the home in, and which currency is my income in?
• How much of my own money do I have, and how much will a Spanish bank lend me?
• How long do I plan to own the home?

The answer depends on your deposit, income, the rate, the margin and the rest of your finances. We are estate agents, not financial advisers. Talk to the bank, and to an independent adviser, before you decide.

Buying on the Costa del Sol?

We help you with the home, the buying process and what you should have in place before you sign.

Talk to us · Read the buying guide

Rates are as of September 2026 and change over time. Terms vary between banks and depend on your situation.