How to get the perfect mortgage for your new home
Getting the right mortgage can save you tens of thousands of euros over the life of the loan. In this guide, we explain how to negotiate the best terms for buying your property on the Costa del Sol.
Buying a property on the Costa del Sol is an exciting decision, but also one of the most important financial decisions of your life. Many buyers — both domestic and international — focus on finding the perfect home and overlook a crucial aspect: financing. A well-negotiated mortgage can save you thousands of euros; a poorly chosen one becomes a burden for decades.
Understand your borrowing capacity
Before searching for properties or visiting banks, you need to know how much you can truly afford. Banks in Spain apply the 30-35% rule: your mortgage payment should not exceed that percentage of your net monthly income. But this figure is a maximum, not a target.
Practical example: If your net income is 3,000 EUR per month, your recommended maximum payment would be 900-1,050 EUR. With a 25-year mortgage at 3% interest, this would allow you to finance approximately 200,000-235,000 EUR.
Remember that banks typically finance between 70% and 80% of the appraised value. You will need to have saved 20-30% of the price plus an additional 10-12% for purchase costs (taxes, notary, registry, administrative fees).
Fixed, variable or mixed rate: which to choose?
This decision depends on your risk tolerance and the economic context:
| Type | Advantages | Disadvantages | Ideal for... |
|---|---|---|---|
| Fixed | Stable payments, no surprises, simple planning | Generally more expensive initially | Those who prioritise stability |
| Variable | Lower initial payment, potential benefit if Euribor drops | Uncertainty, payments can rise | Those who tolerate risk or will repay quickly |
| Mixed | Initial stability, then flexibility | May not be optimal in any scenario | Those seeking balance |
Warning: With variable-rate mortgages, don't just look at the spread. Always ask about the APR (Annual Percentage Rate), which includes all costs: fees, linked insurance and products the bank may require.
Specifics for buyers on the Costa del Sol
If you are a resident in Spain
You can access financing of up to 80% of the appraised value with standard conditions. Banks will assess your job stability, seniority and current level of debt.
If you are a non-resident or foreigner
The Costa del Sol attracts many international buyers, and Spanish banks are accustomed to working with them. However, conditions vary:
- Maximum financing: Generally between 60% and 70% of the appraised value
- Interest rates: Usually slightly higher (between 0.25% and 0.5% more)
- Documentation: You will need to prove income from your home country, often with sworn translations
- NIE: Essential for any real estate transaction in Spain
Some banks with experience in international clients on the Costa del Sol offer specialised departments with staff who speak English, German, French and other languages.
The 5 steps to getting the best terms
1. Prepare your financial profile
Banks assess your risk as a client. A permanent contract with seniority, stable income, low prior debt and a good credit history position you favourably. If you have outstanding debts, consider paying them off before applying for the mortgage.
2. Compare at least 5 lenders
Don't settle for the first offer. Differences between banks can be significant. Check traditional banks, online banks and mortgage brokers. A 0.3% difference in the rate can mean more than 15,000 EUR on a standard mortgage.
3. Negotiate beyond the interest rate
The interest rate is important, but it's not everything. Pay attention to:
- Opening fee
- Appraisal fees
- Early repayment penalties
- Mandatory linked products
Sometimes, a mortgage with a slightly higher rate but no fees turns out cheaper in the long run.
4. Evaluate linked products
Banks offer better terms if you take out home insurance, life insurance, or have your salary paid into their account. Calculate whether these products are worth it by comparing their annual cost with the actual mortgage savings.
5. Review the ESIS carefully
The European Standardised Information Sheet (ESIS) is a binding document that the bank must provide before signing. You have the right to 10 days of reflection. Use them to review every clause and ask questions.
Required documentation
Having everything prepared speeds up the process and shows you are serious:
For residents:
- Valid DNI
- Last 3 payslips (6 if you have variable income)
- Tax return (last 2 years)
- Updated employment record
- Current employment contract
- Bank statements (last 6 months)
Additional documentation for non-residents:
- Passport and NIE
- Income certificate from your country
- Tax return from your country of residence
- Letter from your employer confirming salary and seniority
- Bank statements from your usual bank
About the property:
- Deposit contract or reservation
- Land Registry extract
Additional costs to consider
In addition to the down payment, set aside funds for:
| Item | Approximate percentage |
|---|---|
| Transfer Tax (resale property) | 7% in Andalusia |
| VAT (new build) | 10% |
| Notary | 0.5% - 1% |
| Land Registry | 0.2% - 0.5% |
| Administrative agent | 300 EUR - 500 EUR |
| Valuation | 300 EUR - 600 EUR |
In total: Budget approximately 10-12% of the purchase price for costs.
Common mistakes to avoid
After helping hundreds of clients finance their homes on the Costa del Sol, we have identified the most costly mistakes:
- Applying for a mortgage without sufficient savings. Even if approved, starting without a financial cushion leaves you vulnerable to unexpected costs.
- Not reading the terms of linked products. Many buyers discover years later that they are paying for overpriced insurance.
- Ignoring early repayment fees. If you plan to make advance payments, make sure the penalties are low or non-existent.
- Forgetting recurring costs. A larger property means higher community fees, utilities and property tax. Your budget should account for everything, not just the mortgage payment.
Is it worth using a mortgage broker?
Brokers can be useful if you have a complex profile, limited time, or don't feel comfortable negotiating with banks. A good intermediary knows the market and can obtain terms that are difficult to get on your own.
Their fees are usually 0.5% to 1% of the mortgage amount. Assess whether the savings offset the cost and verify they are registered with the Bank of Spain.
A 0.5% difference in the interest rate on a 200,000 EUR mortgage over 25 years means paying more than 16,000 EUR extra in interest. Spending time comparing and negotiating is the best investment you can make.
Frequently asked questions about mortgages
How much money do I need to have saved to buy a property?
You will need between 20% and 30% of the property price for the down payment, plus an additional 10-12% for costs (taxes, notary, registry and administrative fees). For example, for a property of 250,000 EUR, you should have saved between 75,000 EUR and 105,000 EUR.
What percentage of my income can go towards the mortgage?
Banks recommend that the mortgage payment should not exceed 30-35% of your net monthly income. If you earn 3,000 EUR net per month, your recommended maximum payment would be 900-1,050 EUR.
Fixed or variable mortgage in 2025?
It depends on your risk tolerance. A fixed mortgage offers stability and predictable payments, ideal if you prioritise security. A variable rate can be cheaper initially, but carries risk if interest rates rise. A mixed rate combines both options.
Can non-resident foreigners get a mortgage in Spain?
Yes, Spanish banks grant mortgages to non-residents, although the conditions are different: they finance up to 60-70% of the value (compared to 80% for residents), rates tend to be slightly higher, and additional documentation such as an income certificate from the home country is required.
How long does it take for a mortgage to be approved?
The complete process usually takes between 2 and 6 weeks from application to final approval. It is advisable to start the process well in advance of the planned deed signing date.
What is the ESIS and why is it important?
The ESIS (European Standardised Information Sheet) is a binding document that the bank must provide before signing. It contains all the mortgage terms and you have the right to 10 days of reflection to review it. It is crucial to read it carefully before committing.
Need help with your mortgage?
At SolProp, we work with financial advisors specialised in the Costa del Sol who can help you find the best financing, whether you are a resident or coming from abroad. We accompany you from property search to key handover.