Buying Property in Europe: Mortgage Guide for 2025

Buying property in another European country is a goal for many UK residents, whether for a holiday home in Spain, a permanent move to France or Portugal, or a buy-to-let investment in a faster-growing market. The mortgage process in Europe works differently from the UK in several important ways, and the purchase costs can be significantly higher than buyers expect.

This guide covers what you need to know about getting a mortgage in Europe, how rates and lending criteria vary by country, what additional costs sit on top of the property price, and the specific position UK nationals are in since Brexit. Use our European mortgage calculator to model repayments across different loan amounts, terms and interest rate scenarios.

European mortgage markets vary considerably

There is no single European mortgage market in the way there is a UK one. Each country has its own lenders, its own regulatory framework, its own typical loan-to-value ratios, and its own approach to interest rates. Some markets are dominated by variable rate mortgages linked to the Euribor benchmark, while others lean heavily toward fixed rates. This affects not just your monthly payment but your exposure to interest rate risk over the life of the loan.

Mortgage rates across Europe tracked the European Central Bank's rapid rate-rising cycle that began in 2022. By early 2025, ECB rates had come down from their peak, bringing mortgage rates down with them, but they remained meaningfully higher than the historic lows seen in 2020 and 2021. Spanish and Italian variable rate mortgages tied to 12-month Euribor were particularly affected during the rate-rising period.

As a foreign buyer, you typically face stricter lending criteria than a resident national. Most European lenders cap the loan-to-value at 70% or 80% for non-resident buyers, meaning you need a 20% to 30% deposit before you even start adding purchase costs. Some Spanish banks lend up to 70% of the bank's own valuation of the property (which may differ from the purchase price), making the effective deposit requirement higher still.

What mortgage rates look like in 2025

These rates are for guidance only and vary considerably depending on your income, the loan-to-value, the property type, and the specific lender. Getting quotes from multiple lenders in your target country, ideally through a local mortgage broker who works with foreign buyers, will give you a more accurate picture for your situation.

Life insurance is typically required alongside a European mortgage, unlike in the UK where it is strongly advised but not usually mandatory. Some lenders also require you to take out home insurance through them, adding to the overall cost of the product.

Purchase costs: what you pay on top of the asking price

This is where UK buyers get the biggest surprises. In the UK, buying costs are relatively low: stamp duty (which can be zero for first-time buyers under the threshold), legal fees, and surveyor costs typically add up to a few percent of the purchase price. In much of Europe, the purchasing costs are substantially higher and cannot be added to the mortgage.

On a Spanish property costing €250,000, you could be paying €25,000 to €37,500 in purchase costs that need to come from your own funds. Combined with the 30% deposit requirement for a non-resident, you might need €75,000 to €95,000 in cash before you even factor in mortgage arrangement fees and any renovation costs. Planning your total cash requirement carefully before you start searching is essential.

UK nationals and European mortgages post-Brexit

Brexit changed the practical reality for UK nationals buying in the EU in a few meaningful ways. Within the EU, UK nationals are now treated as third-country nationals rather than EU citizens, which affects both the ease of obtaining a mortgage and the right to live in the property.

Most EU countries still permit non-EU nationals to buy property freely, so the right to purchase is rarely the issue. The practical complication is that many EU lenders are less willing to lend to non-EU residents, particularly those without an EU bank account or without local income that can be assessed under their own credit criteria. UK income earned in the UK can still be used for mortgage applications in countries like France and Spain, but the documentation required is more extensive and the lender pool is smaller.

For those planning to live in the property, the right to reside has become separate from the right to own. EU countries generally allow UK nationals to spend up to 90 days in any 180-day period without a visa under Schengen rules. Beyond that, you need a residency visa specific to your destination country. Some countries, including Portugal and Spain, have created pathways specifically for property purchasers above certain value thresholds, though the rules have changed in recent years.

Spain: what buyers need to know

Spain is the most popular European destination for UK property buyers and has a well-established infrastructure for handling foreign purchases. The notarial system means that both buyer and seller sign in front of a notary public, who verifies the transaction and registers it. You need a Spanish tax identification number (NIE) before you can complete a purchase.

Property transfer tax (Impuesto de Transmisiones Patrimoniales) on resale properties varies by region: it ranges from 6% in some areas to 10% in others. New build properties pay VAT (IVA) at 10% instead. On top of this, expect to pay around 1% to 1.5% in notary and land registry fees, plus legal fees which typically run at 1% of the purchase price for a straightforward transaction. Using an independent lawyer (abogado) who acts only for you, rather than the agent's recommended solicitor, is strongly advisable.

France and Germany: different systems, different challenges

France's notaire system consolidates most of the legal and tax functions into a single official, and the notaire's fees are regulated by the state rather than being negotiated. The high "frais de notaire" are therefore predictable and non-negotiable. French mortgages are typically long term, up to 25 or 30 years, and French banks have historically been willing to lend to UK nationals with French income or those with strong overall financial profiles. Post-Brexit, some lenders have become more cautious, but the market remains accessible.

Germany is a more unusual case for foreign property buyers. The mortgage market in Germany has traditionally been focused on German residents and German banks have been more conservative about lending to non-residents. Many UK nationals buying in Germany either self-fund with equity from a UK property or use international private banks that specialise in cross-border lending. The purchase costs in Germany are relatively lower than France or Spain, but the Grunderwerbsteuer (property transfer tax) varies by state, running from 3.5% in Bavaria to 6.5% in Berlin and Brandenburg.

Portugal has emerged as a popular option partly because of its Non-Habitual Resident tax regime, which offered significant income tax advantages for new residents for a ten-year period. That regime has been reformed and its future has been politically uncertain, so anyone buying with NHR tax benefits in mind should verify the current status with a Portuguese tax adviser. Portuguese banks do lend to non-residents, though typically at lower loan-to-value ratios than resident purchasers.

Making the numbers work

The critical discipline when buying European property is to model the total cash requirement accurately before starting the search. Adding up the deposit, purchase costs, any renovation budget, and currency conversion losses gives you the real number you need to have accessible. Then add the mortgage payments to your monthly outgoings and check whether rental income (if it's a buy-to-let) or your savings can sustain those payments through any void periods or unexpected costs.

Exchange rate risk is also a practical consideration. If you are borrowing in euros but your income is in pounds, movements in the GBP/EUR rate directly affect how expensive your mortgage is in sterling terms. Some buyers hedge this risk partially by maintaining euro savings, by taking a lump sum transfer at a favourable rate, or by using a forward contract with a currency specialist. Use our European mortgage calculator to model what different deposit sizes and interest rates mean for monthly payments, so you can sense-check your borrowing plan before approaching lenders.