Will Expat Spanish Property Mortgages Still Be Available Post-Brexit?

In spite of the looming threat of a no-deal Brexit, Spain is still a favourite for second home purchases, with expat mortgages hopefully still available after October 31.

Many British expats now permanently living in Spain bought a second home in the hope they could move permanently when retirement finally kicked in. Reasons included the reasonable price of property and the ease of getting a mortgage from a Spanish bank. Since the 2016 Brexit referendum, many have followed in the same manner, with mortgages still available and house prices still favourable compared with other EU member state offerings.

Those now desperate to leave the UK by taking advantage of free movement whilst there’s still time don’t have long to make it happen, and those within only a few years of retirement are now wondering if a mortgage will even be possible in the future. According to experts in the real estate field, those already paying off mortgages on their Spanish properties won’t see any changes or modifications to their loan agreements, as banks can’t legally modify the terms and conditions of existing loans.

As regards Britons arriving after Brexit, it’s now possible in Spain for foreign citizens from all nationalities to request mortgages on a non-resident basis, and this isn’t expected to change. In addition, Britons are the main foreign citizen takers for such mortgages, with the Spanish government fully aware of the effect on the property market should a ban on expat property loans be introduced.

The only aspects likely to change post-Brexit are related to the assessment of risks and the treatment of non-payers. At the present time, British defaulters who scurry back home can be pursued by EU banks in the UK via a Spanish court order enforcing banks’ rights to reimbursement. How these rules will change once Brexit is an uncomfortable reality isn’t known and possibly isn’t even being thought of at present. The sensible answer to this dilemma would be enhanced risk assessment of British applicants, in the same manner as is now required for non-EU citizens.