Glossary: Spain & Portugal mortgages
The key terms around property financing in Spain and Portugal for non-residents — explained neutrally. Tax questions are answered by your tax adviser or gestor.
Search terms
No term found. Feel free to ask your question directly in the appointment.
Non-residents
NIE (Número de Identificación de Extranjero)#
The NIE (Número de Identificación de Extranjero) is the Spanish tax and identification number for foreigners. It is a prerequisite for almost every financial and property transaction in Spain, including purchase and mortgage.
Without an NIE almost nothing works in Spain – applying for it early avoids delays during the purchase.
Financing in Portugal#
Non-residents can also buy and finance property in Portugal. The prerequisite is the NIF tax number; the financing amount is – as in Spain – lower than for residents. The main purchase taxes are IMT (transfer tax) and Imposto do Selo (stamp duty), with IMI as the ongoing tax.
Knowing the parallels and differences to Spain lets you decide between the two markets on a solid basis.
Mortgage
Hipoteca no residente#
A Hipoteca no residente is a Spanish property loan for buyers without tax residence in Spain. Banks assess foreign income, employment and country of origin and tend to apply stricter conditions than for residents.
With the right choice of bank and preparation, a difficult starting position becomes a workable financing.
LTV para no residentes#
The maximum loan-to-value (LTV) for non-residents in Spain is usually significantly lower than for residents; the lower of purchase price and appraised value (tasación) generally applies. Accordingly, more equity is required.
Realistic LTV expectations stop the search from failing at the financing stage.
Costs
ITP (Impuesto Transmisiones)#
The ITP (Impuesto sobre Transmisiones Patrimoniales) is the Spanish transfer tax on the purchase of a resale property. The rate is set by the respective autonomous region and therefore varies regionally.
The ITP is often the single largest cost item – budgeting for it early protects against financing gaps.
Gastos de compra#
The Gastos de compra are the total transaction costs in addition to the purchase price: taxes (ITP or IVA), notary, land registry, tasación and, where applicable, a lawyer. They are generally paid from equity.
Knowing the gastos lets you calculate the real capital requirement, not just the purchase price.
Plusvalia municipal#
The Plusvalía municipal is a municipal tax on the increase in value of the land, payable on sale or transfer. It is usually borne by the seller.
Knowing the plusvalía lets you plan a later sale realistically.
Taxes
IBI (Property tax)#
The IBI (Impuesto sobre Bienes Inmuebles) is the annual Spanish property tax. It is based on the cadastral value (valor catastral) and is levied by the municipality.
Ongoing costs such as the IBI belong in every honest profitability or budget calculation.
Modelo 210 / IRNR#
The Modelo 210 is the Spanish tax return for non-residents (IRNR – Impuesto sobre la Renta de no Residentes). It is used to declare income from Spanish property – rental income where let, or a notional usage value for a non-let second home.
Knowing the IRNR obligation early avoids omissions and lets you plan the ongoing tax burden realistically.
Steps & process
Tasación (Valuation)#
The Tasación is the property valuation prepared by an approved company. Spanish banks require it before a loan offer; the loan-to-value refers to the tasación value.
Understanding the tasación shows why it is the appraised value, not the purchase price, that determines the financing.
Nota Simple#
The Nota Simple is the official land registry extract from the Registro de la Propiedad. It shows the owner, charges, mortgages and encumbrances on a property.
Checking the Nota Simple protects against unpleasant surprises such as hidden encumbrances.
Cuenta bancaria española#
A Spanish bank account is usually required for purchase and mortgage in Spain – it handles the purchase price payment, the mortgage instalment and ongoing costs such as IBI and other charges.
Sorted out early, the account is one fewer item to worry about in the process.
Contrato de arras#
The Contrato de arras is the Spanish reservation/preliminary contract. A deposit (arras) is usual; if the buyer withdraws they normally lose it, if the seller withdraws they often repay it twice over.
A well-drafted arras contract protects the deposit if, against expectations, the financing falls through.
Escritura#
The Escritura pública de compraventa is the notarial deed of sale in Spain. On signing before the notary, ownership passes; it is then registered in the land registry.
Clarity about the escritura removes the worry of having to travel in person for the notary appointment.
Proceso de compra#
The typical purchase process in Spain: obtain NIE and account, clarify the property and financing, preliminary contract (arras), tasación and loan offer, notarial Escritura, land registry entry and tax payment.
A clear roadmap makes a purchase abroad plannable rather than confusing.