Spanish banks' policies in providing mortgages and loans

The Spanish banking system is governed by strict regulations aimed at ensuring financial stability and minimizing the risk of loan defaults. These policies are influenced by national and European regulations, as well as the economic situation in the country. Below we look at the main criteria used by banks when assessing applications for financing.

When it comes to obtaining mortgages and personal loans in Spain, it is important to consider several factors that can affect the approval of the application. For example, for a mortgage, banks expect the borrower to have a stable income, as the monthly payment should not exceed 30-35% of income. It is also important to have an open-ended employment contract or proof of a stable income if you are self-employed. In addition, a down payment of 20-30% of the property value is usually required.

As for consumer loans, banks focus on the borrower's solvency, the purpose of the loan and, sometimes, the presence of guarantors. Rates and repayment terms depend on how the bank assesses the risk.

The types of mortgages in Spain are also varied. For example, a fixed-rate mortgage allows the borrower to be sure of the same payments for the entire term of the loan, while a variable rate can vary depending on market conditions. There is also a mixed option, which combines a fixed rate at the first stage and a variable rate at a later stage.

Foreigners who want to get a mortgage in Spain face additional difficulties. Banks often require more documents and may offer a lower interest rate for financing. In addition, the creditworthiness checks for foreign borrowers are usually more thorough.

The procedure for obtaining a loan differs for residents and non-residents. For residents, passport data and a certificate of income are usually enough, while non-residents will need to prepare additional documents, such as tax returns and bank statements from the country of residence.

It is important to remember that the process is regulated by legislation that protects the interests of borrowers, and banks strictly follow the rules set by both local authorities and the European Central Bank.