The arrival of summer sparks interest in buying a second home in Spain, particularly among foreign buyers. After travel restrictions during the pandemic, a renewed upswing in property purchases has continued into the current year, with momentum visible at the end of 2021.
The Spanish Mortgage Association (AHE) publishes periodic reports on the country’s mortgage portfolio. The latest figures, released in December 2021, show that 86.7% of mortgage balances finance primary residences while second homes account for a smaller share, at 9.8%. This second category marks a modest rise of 0.7 percentage points compared with the end of 2020.
Similar insights come from the Photocasa Research study, which profiles second home buyers in Spain. The portal notes that Spaniards seeking a second home represented 11% of total demand in 2021, up nearly two percentage points from 2020. Foreign buyers continued to play a prominent role, accounting for a large portion of purchases at 89%.
Mortgages for second homes, stricter lending
iAhorro, a mortgage consultant and comparator, reports that between January and June 2022, about 75.1% of new mortgage clients were seeking financing for their first home. In contrast, 24.9% pursued loans for a second home.
In practice, whether a buyer is foreign or domestic, loan terms differ for first versus second homes. Lenders generally offer financing around 80% of the purchase price for a primary residence, with higher requirements possible if guarantees exist or the applicant has a strong profile. For second homes, financing typically aligns with the property value or its appraised worth, usually around 60%, as explained by Simone Colombelli, Mortgage Manager at iAhorro.
Foreign buyers can face higher interest rates, shorter repayment periods, or financing below 60% in some cases, adds Colombelli.
What should a foreign citizen do to buy a home in Spain?
Typically, residents of European countries or the United States enjoy more favorable terms, especially those who hold Spanish citizenship while living abroad. Non residency from outside the EU also works, but terms depend on bilateral agreements with Spain, since banks perceive higher risk from money laundering. The standard process begins with obtaining a NIE, the Foreign Identification Number, which confirms legal presence in Spain. Buyers must submit translated documents, including employment evidence, payrolls, tax returns, and proof of work life. Banks may also require opening a local bank account to issue a mortgage.
Continued interest in the Canary Islands, the Balearic Islands, and the Levante
There is ongoing demand from foreigners investing in Spain, with a preference for the Balearic and Canary Islands and the Levante peninsula, according to iAhorro. The majority originate from the United Kingdom, Germany, and France, a trend later corroborated by regional registry data covering early 2022.
Recent months have brought shifts in buyer profiles. Prior to the invasion of Ukraine, many Russian residents were seeking housing in Spain, but geopolitical developments and restrictions changed demand dynamics. As a result, buyers from Russia and other markets adjusted their activity levels.
Spanish registrars report that the Balearic Islands accounted for about 35.37% of foreign purchases, the Canary Islands for 26.87%, the Valencian Community for 25.45%, and the Region of Murcia for 19.42%. In the first quarter, Andalusia showed a notable rebound, rising to 15.14% of foreign purchases, signaling a broadening geographic interest among international buyers.