Getting a mortgage in Spain: do you have to take the bank's life and home insurance?

You've found the house, the bank has approved the mortgage and, in the final meeting, a stack of insurance policies appears on the table: home, life, sometimes more. Many expats sign everything, assuming it's compulsory. Most of it isn't, at least not with the bank.

What's compulsory with a Spanish mortgage

• Building insurance (seguro de daños): the property used as security for the mortgage must be insured against damage, at least for the value of the building. This is a legal requirement for mortgaged property.

• Life insurance: not compulsory by law. The bank may ask for it as a condition for a better interest rate, but it can't force you to take one.

What the bank can't do

Under the Spanish mortgage law of 2019 (Ley 5/2019), the lender:

• Can't force you to buy insurance from the bank or from a company it chooses.

• Must accept an alternative policy from another insurer, as long as it offers equivalent cover.

• Can offer you a discount (bonificación) on the interest rate for taking its products. That's legal, but you should compare: sometimes the discount is worth less than the extra cost of the bank's insurance over the years.

Choosing your own policies

In practice, many clients save money by taking life and home insurance from an insurer of their choice and pointing it out to the bank. To keep things simple:

1. Ask the bank in writing what cover and minimum amounts it requires.

2. Compare the total cost, not only the monthly premium: include the interest rate difference with and without the bank's products.

3. Check the beneficiary: the bank usually asks to be named as the first beneficiary for the outstanding amount of the loan.

4. Mind the renewal dates so you never leave the property uninsured.

Life insurance for expats with a mortgage

Life insurance protects your family if you die or become permanently disabled: the insurance pays off the remaining mortgage, so your partner or children keep the house. For expats it can also matter because family members may live in different countries, and inheritance in Spain has its own rules and taxes.

Our life insurance for expats offers different plans depending on your age and needs. For the home, see our home insurance plans, with squatter protection included in all plans.

Already signed?

If you took the bank's policies, it's usually possible to change them at renewal, but check the effect on your interest rate first. We can look at your mortgage conditions and your current policies with you before you decide.

How we can help

Bring your mortgage offer to our office in central Murcia, or send it by WhatsApp, and we'll compare the bank's insurance with an Allianz alternative, in English, so you can decide with the full picture.

Compare before you sign

Get a life insurance quote or ask us to review your mortgage insurance.