Madrid, one of the best cities in the world to call home
Welcome to the Homevest Digest, a mortgage newsletter for non-residents looking to buy properties in Spain.
In this month’s edition, you’ll discover why Madrid is one of the top cities in the world to call home. We’ll cover:
The property market in Madrid
Best places to buy a property in Madrid
What makes a great non-resident mortgage candidate: insights from Natalia Dominguez, UCI
Mortgage rates in Spain for non-residents
Read time: 6 minutes
The sun and the dreamy sea always come to mind when thinking about Spain. Although Madrid doesn't have access to the Mediterranean, it compensates by being one of Europe's greenest cities.
Monocle’s annual ranking of the world’s 20 most liveable cities places Madrid in the top 5. The ranking evaluates how well the city has performed over the last 12 months and compares life expectancy, highlighting that quality of life also means quantity.
Add to the list that the cost of living in Madrid is more affordable than in other European cities like London, Paris, or Amsterdam. This affordability extends to property prices, making Madrid one of Spain’s top cities for foreign buyers.
What’s the property market in Madrid?
Madrid, a city that mixes business and leisure, constantly demands homes and commercial spaces.
As of June 2024, the average price for residential properties was €4,729 per m², marking a 20.24% rise from June 2023's €3,933 per m².
“Madrid still offers properties at more affordable prices in areas with high demand. Although most of these properties need updates and renovations, this represents the value one can add. The best part is that the demand for rental properties is at an all-time high, with so many people looking for a European lifestyle. Madrid might be the best option among them all”, says Oana Buda, a real estate personal shopper in Madrid.
Best places to buy a property in Madrid
There are over 20 districts to choose from—some are more expensive than others, some closer to the parks or museums. The city center, for instance, is ideal for those seeking convenient transport, job options, and a vibrant expat community.
Salamanca: Madrid's premium area
Average price per m²: €6,698
As one of the city's safest neighborhoods, Salamanca has the highest property prices and attracts affluent residents. The area is renowned for its elegant apartments and townhouses, many of which are housed within historic buildings.
Chamberi: residential atmosphere near the center
Average price per m²: €6,528
Despite its central location, Chamberi is a top choice for its safety, educational institutions, and serene ambiance. This neighborhood is popular with professionals, families, and retirees, offering modern to historic properties.
Villaverde: more budget-friendly options
Average price per m²: €2,143
Villaverde is a neighborhood known for its affordable prices due to its industrial history and location. Its appeal is growing, fueled by new developments and improved transportation links. The neighborhood predominantly features apartments, ranging from older buildings to new constructions.
Retiro: known for peacefulness and greenery
Average price per m²: €5,753
Retiro is the best neighborhood for those with mid and high-range incomes who want to live close to the city and have easy access to the park.
Known for housing one of the city's largest parks and numerous galleries and museums, Retiro is in high demand for its spacious apartments and homes.
“As you can see from the variety of prices and neighborhoods, Madrid has something to offer everyone. In the luxury market, you can find spectacular apartments and houses in beautiful settings. As an investor, you can add value by renovating, reselling, or renting at top market prices while holding for the constantly growing real estate market. This segment has been growing exponentially over the past few years, with significant overseas capital making its way to Spain”, explains Oana Buda.
While buying a property with cash might be quicker, a mortgage frees up capital for other investments and offers potential tax benefits from interest deductions.
For a quick estimate of how much you can borrow based on your financial profile, check out Homevest. Discover your borrowing capacity before taking your mortgage process to the next level.
What makes a great non-resident mortgage candidate: insights from Natalia Dominguez, UCI
Natalia Dominguez is the International Buyer’s Manager at UCI (Unión de Créditos Inmobiliarios). She has extensive experience in non-resident mortgages and shares valuable recommendations for applicants interested in securing financing in Spain, starting with UCI's expectations for a great mortgage candidate.
Natalia, you’ve seen hundreds of mortgage applications and customer profiles. Can you please tell us what makes a great candidate?
A great candidate for a mortgage typically has a stable and consistent income, and low debt in their country of origin.
One of the common mistakes when applying for a mortgage is not checking your credit rating in your own country first. Your credit rating is important for mortgage eligibility and is based on your credit history.
Depending on your nationality, it is recommended that you check your credit score beforehand. This way, you'll avoid unpleasant surprises later on and better understand your financial situation, allowing you to make a more informed decision.
What are the non-negotiable criteria for a non-resident mortgage in Spain?
The personal contribution, or down payment, must be higher for non-residents. This is indispensable when applying for a mortgage in Spain.
Another aspect often overlooked is the origination fee and taxes, which typically account for about 10% of the total project cost. You may spend more than anticipated if you forget to include these in your calculations.
What makes your bank competitive in the international buyers market?
Our commitment is to help you realize your dreams in a safe and responsible manner. At UCI, our highly specialized team supports clients from the beginning of their search.
We offer unique products, such as purchase and renovation loans, allowing clients to buy and renovate properties simultaneously with a single loan.
We provide pre-approvals and offer the flexibility of a risk department that reviews each transaction, fully understanding complex cases.
If you had to give just one piece of advice to non-resident buyers, what would you say to help them make the most out of their mortgage application?
Approving a non-resident transaction is a complex process that starts once all the necessary information is available to the bank. I recommend being quick and timely in providing documentation and using a service like Homevest.
Mortgage rates in Spain for non-residents
The average interest rate in Spain was 4.72% two months ago, continuing its decline from 4.91% at the beginning of the year.
Given the minimal month-to-month changes, we have decided to update our interest rates quarterly. This approach aims to provide greater accuracy and transparency for our customers when receiving mortgage offers.
Always remember that mortgage rates can vary depending on the type of property you buy, its value, and the size of your deposit.
If you’ve found what we wrote about interesting and want to read new topics, hit reply. We’d like to hear from you.
Thanks for being here, and we’ll see you next month.
PS. Here are other ways we can help:
Read our blog for insights about Spanish mortgages for non-residents.
Estimate your budget to understand how much you can afford before taking your mortgage process to the next level.
Find your right mortgage by signing up for a fast and easy process.