Should you use a Spanish mortgage or UK mortgage when buying property in Spain?

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The arguments in favour of using a Spanish mortgage as opposed to a mortgage taken out in the UK are as follows:

First of all it makes sense to have the asset (the property) and the liability (the mortgage) in the same currency (i.e. Euros). This helps to minimise one source of uncertainty and risk (the Euro-Sterling exchange rate).

Secondly the interest rates at present on Spanish mortgages are lower than those on British mortgages, and are expected to remain lower for the foreseeable future. This means that your monthly interest payments will be lower with a Spanish mortgage.
Thirdly if you plan to rent out your property and use the income to help finance the mortgage then it makes sense to have your monthly mortgage repayments in the same currency as your rental income.

Finally most UK mortgage lenders are not geared up to deal with lending against Spanish property. Whilst Spanish lenders may not be familiar with foreign borrowers, UK lenders are not familiar with Spanish property and this may cause them to give you unfavourable terms.
Therefore on balance, and especially under the present economic circumstances, we recommend a Spanish mortgage over a mortgage taken out in the UK. Nevertheless each buyer has their own unique circumstances and this recommendation may not apply to all buyers.

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© Mark Stucklin of Spanish Property Insight – Everything you need to know about Spanish property

More information about mortgages in Spain:

Start arranging your Spanish mortgage early on

Overview of the Spanish mortgage market

Spanish mortgage costs explained

Is a Spanish mortgage a good idea?

Spanish mortgages vs UK Mortgages