Equity release on Spanish property.

Equity release in Spain is typically a conventional mortgage secured against a property you already own, with the loan proceeds released to you at completion rather than to a seller. It is not to be confused with UK-style lifetime mortgages, which are a distinct product with very limited availability in Spain.

Most releases are structured as standard repayment or interest-only mortgages over 5–25 year terms. For borrowers aged 65+, a specialist hipoteca inversa product is available from a small number of Spanish institutions.

Non-resident owners can typically access up to 60% of current open-market value (as evidenced by a lender-appointed valuation). Higher LTVs — 65–70% — are occasionally achievable for prime assets or through private banks under an assets-under-management arrangement.

Affordability applies as it would for a purchase mortgage — total worldwide debt commitments below c.35% of gross income remains the standard test.

Common uses include:

• Deposit or cash purchase of a further property (Spain, UK or elsewhere).
• Business capital injection or working capital.
• Renovation, extension or improvement of the Spanish asset.
• Portfolio diversification into other asset classes.
• Estate planning and intergenerational wealth transfer.

Some Spanish retail banks restrict equity releases to real-estate purposes; international lenders and private banks are typically more flexible on stated use of funds.

• Capital and interest: the standard structure — predictable amortisation, lowest total interest cost.
• Interest-only: preserves liquidity; requires a credible repayment strategy at term end (sale, refinance or capital event).
• Mixed rate: fixed for the first 5–10 years, then variable — a middle-ground between certainty and flexibility.
• Multi-currency: GBP or USD facilities available from selected international lenders where income is non-euro.

Raising debt against a property is not itself a taxable event. However, non-resident owners should be aware that:

• Interest on Spanish mortgages may be deductible against IRNR rental income for let properties.
• Mortgage debt reduces the Spanish wealth tax (Impuesto sobre el Patrimonio) taxable base.
• UK residents remain within the UK tax net on any income or gains generated with released funds.

Take joint UK and Spanish tax advice before structuring — the interaction between the two systems materially affects the net outcome.

Heirs frequently need capital before they have any: Spanish inheritance tax is due within six months of death, and the property cannot be sold or mortgaged until the deed of acceptance is signed and the heirs are registered on title. Once they are, an equity release or refinance against the property is a common way to settle the tax without a forced sale.

Regional reliefs mean the bill varies enormously — close family pay almost nothing in Madrid, Andalusia, the Balearics and the Canaries, but materially more in Catalonia. Our guide to Spanish inheritance tax for non-residents sets out the regional allowances, the six-month deadline and the succession rules that decide who inherits.

1. Weeks 1–2: fact-find, indicative terms and lender selection.
2. Weeks 2–4: full application, underwriting and valuation instruction.
3. Weeks 4–6: formal offer (FEIN) issued; 10-day cooling-off period begins.
4. Weeks 6–10: notary completion; funds released to your account.