Believe it or not, it’s possible to achieve your goal without ever travelling in person to Spain!
I would like to share with you some recent experiences I have had with clients who wanted to buy an apartment in Madrid but were not physically in Spain when the pandemic hit.
How to look for an apartment from abroad
Obviously nowadays you can go online, and browse through tens of thousands of listings. Some listings are very professionally done and include a virtual tour of the property, which helps a great deal in getting a sense of the space. It’s a good place to start, but doesn’t really substitute an in-person visit.
What I have been doing for my clients is going to see the apartment myself, and making my own video-tour of the place, highlighting all the pros and cons, just like I would if we were viewing it together in person. This way you get to see the apartment without any editing or filters, and without hiding the ugly parts that aren’t shown in the ad. On some occasions I have even connected through FaceTime or Whatsapp video with my client, while in the apartment, so they could see it live and ask questions.
I know it’s still not the same thing as seeing and feeling the place in person, but according to my clients it comes close.
How to get a mortgage from a Spanish bank from abroad
If you don’t have the full amount needed for the purchase, you might want to consider applying for a mortgage from a Spanish bank. As a foreigner, it is possible to get a mortgage from a local bank, but the process is trickier if you can’t physically come to Spain.
However, it can be done!
First, find a bank that works with non-resident foreigners. Not all banks will give a mortgage to non-residents, and some have restrictions such as “only if your main source of income is in Euros”. Get them to look at your financials and give you an idea of what conditions they can offer, and what maximum amounts they would allow you to borrow. (Disclaimer: I do all this for my clients myself, of course, but I am describing the process so you can do it by yourself too, if you prefer).
Some things to bear in mind:
Each bank will have different restrictions, and the conditions for non-residents are typically stricter than for residents, because banks perceive a higher risk in financing someone who doesn’t live in Spain. Also, bear in mind that bank policies change, so what a bank has done for someone last year is no proof that it will do the same thing today.
Your LTV (loan-to-value) will be lower than what residents get. Typically, you will be able to finance between 50% and 70% of the purchase price, maximum.
Interest rates can also be somewhat higher than for residents: expect to get rates of around 2% to 3%.
Some banks also limit the number of years to a maximum of 20-25.
Typically, the bank will ask for your ID, proof of income, proof of savings, any outstanding debts, credit score (eg. Experian), income tax return, among others.
They will also ask for the details about the property you want to purchase. If you haven’t chosen a property yet (most likely scenario, as you should definitely do this before making a down-payment on any property), you can either give the details of a property that more or less fits your initial idea, or tell them straight that you haven’t decided yet and want to determine the budget based on the maximum amount you can borrow.
Then they will get back to you (sometimes in a few days, sometimes in three-four weeks), and give you an answer.
Once a bank has looked at your financials and said that the operation is approved, it means that in principle you are safe to make an economic commitment to purchase a property.
Let’s skip ahead a few steps in order to stay on the topic of the mortgage. Let’s say you have found the property you want to buy, reached and agreement with the seller and already paid a deposit (or “arras”).
This is when things get tricky if you can’t physically come to Spain. The first thing the bank will ask you to do is open a non-resident bank account, and most will require you to go in person to the branch for ID verification and to sign the documentation needed to get the account open. This might sound archaic in the era of WhatsApp and online meetings, but is justified by the strict anti money laundering laws in Spain: they need to be able to match your face to your passport, and they need to see that the passport is not fake – something that can’t be done through a video conference. At least that’s how they explained it to me.
Anyhow, how do you circumvent this problem? With a Power of Attorney.
Power of attorney – your secret weapon:
A Power of attorney (poder notarial, in Spanish) is a document that allows someone else to sign documents and to act in your name. What you allow that person to do and what degree of flexibility you grant them is entirely up to you and is based on your needs and the trust you place in the person you’re naming as your agent.
However, if you can’t come to Spain and need that person to be able to do everything necessary to finalise your real estate purchase, then the POA you grant should include the following powers:
To buy and pay for a certain property at a determined price.
To request and secure loans (mortgage).
To sign the certificate of compliance with the material transparency check (it’s Very important to include this specifically, as your representative needs to be able to sign the “Acta de transparencia” in front of a notary, ten days before the signing of the deeds).
To execute and sign public and private documents of sale and mortgage loan contracts.
To open and operate with bank accounts.
Optionally, to sign and act on your behalf with utility and service providers (to change the utilities to your name after the purchase).
There are several ways to get a POA, the easiest being going to your closest Spanish Consulate and asking the Consul to act as a Spanish Notary Public. The alternative would be to get the text notarised with a local Notary Public and then have it legalised with The Hague Apostille.
However you do it, it’s important to redact and legalise the POA correctly, as it will be your key to securing the purchase in Spain without physically traveling here.
Once your agent has the POA, he or she can open a bank account for you at almost any bank. There are a few exceptions, such as online banks, and Sabadell for example also doesn’t allow it. But then there are ways to solve that problem too!
Once the bank account is open, the mortgage request can be formalised, the mandatory official appraisal requested, after which you should get the formal offer from the bank, reflected in two documents called FEIN and FIAE which your agent will have to sign using the POA.
FEIN stands for “Ficha Europea de Información Normalizada” (Standard European Information Sheet) and FIAE is “Ficha de Advertencia Estandarizada” (Standardised Warnings): in combination they are a summary of the actual terms and conditions the bank is offering you, and warnings about what could happen to your monthly quote if interest rates go up.
Please note that until you get these two documents, anything the bank tells you is NOT binding. Only these two documents actually bind the bank to their word.
Next step is to sign the certificate of compliance with the material transparency check (in Spanish: “Acta de Transparencia”). This is also something your agent can do with the POA, and is a legal requirement since the coming into effect of the new mortgage law in 2019. It is basically a short meeting with the notary, where they will make sure that you understand the conditions of the mortgage.
The FINAL step is to sign the mortgage deeds, which is done at the same time as the signing of the purchase deeds, at the notary’s office.
How to get a NIE from abroad
Another thing you will need in order to complete your home purchase is a NIE, which stands for “Número de Identificación de Extranjeros” (Foreigner identification number). If you can’t come to Spain to handle this in person, a NIE can also be requested from abroad at the Spanish Consulate, or by granting another POA for this specific purpose to your legal representative in Spain.
Bear in mind that since the pandemic, the administration is moving slowly, so allow yourself at least a couple of months to get your NIE.
How to formalise the Deposit and Purchase Deeds from abroad
Ok, once you have found and made a deposit on your chosen property, you got your NIE and you secured your mortgage, it’s time to sign the deeds! Once again, you can do this without coming to Spain by allowing your agent, who has the POA, to sign in your name.
What I personally do with my clients is to review the text of the deeds clause by clause the days before the appointment at the notary, to make sure everything is fully understood. It’s also more important than ever to make sure all the details have been talked about and agreed on BEFORE the signing day, to avoid any last minute changes.
If the time differences allow for it, I have even connected with my clients via video call directly from the notary’s office, so they could participate in and supervise in person the signing process.
After the signing of the deeds
Once you have signed the deeds and paid for the property, there is still a lot of paperwork to do. As you can already guess, you can handle all this remotely by having your agent take care of everything with the help of the POA. If you are not planning to come to Spain anytime soon, you can even have your agent find a tenant for your apartment and rent it out while you’re not using it.
And voilá!, you’re the proud owner of a house or apartment in Madrid, WITHOUT EVER TRAVELING TO SPAIN!
Isn’t this a great example of adapting to the current times?
Feel free to contact me
-no strings attached, promised- if you would like some more details about any of the steps mentioned in this post. I’m always glad to assist and advise!