There are various options of how you want to finance your home in Spain. It is important to discuss this with your accountant or tax lawyer. Spain has attractive mortgage rates and banks can mortgage properties to foreign buyers. The maximum loan amount is usually 80% for new homes. Some lenders do not require proof of income but than the rate might be not as attractive. Usually you need to give proof of income and your monthly spending. The income of the spouse will also been taken into consideration.
It is common practice in Spain to assume the mortgage, something that you don't see that much in other countries any more. The property is used as a security for the bank , which is also filed at the registry.
It is much harder to mortgage your property as a secondary home than if it were for your primary residence. The maximum loan to value percentage is lower and the rates are less favorable. Many foreigners finance their vacation home either in cash or take out a second mortgage on their existing home.
If you plan to live permanently in Spain, you may want to shop around before you make your choice. Financing your property with a lender outside of Spain may effect your tax deductions in Spain. Also, offshore banks usually have mortgage services.
Interest on your mortgage is a deductible for your Spanish tax liability, as long as you have a Spanish mortgage. It is unsure if Spain can maintain this feature since many EU members dropped this deduction or never had it. It is likely that existing mortgages will be grand fathered in, even if the deduction is eliminated.
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