When a Flat Sale Falls Through Over the Mortgage in Spain: Why It Happens and How to Sell to Buyers Who Can Pay

Few things are as disheartening for someone selling a flat as watching a sale that seemed settled fall apart. The buyer viewed the property, negotiated the price, signed the arras (the deposit contract) and then, weeks later, the news arrives: the bank won't grant the mortgage, or it will, but for less money than they needed. When a flat sale falls through over the mortgage, the seller doesn't just lose that buyer. They lose months, keep paying the bills and often go back on the market at a lower price.

In 2026 this risk hasn't gone away. Just over half of home purchases in Spain are financed with a mortgage loan, interest rates have risen compared with 2025 and banks have become stricter. In this article we go through the official mortgage data, how long it takes to sell a flat in Madrid and how much each unsold month costs. Above all, we look at how to tell a buyer who can genuinely buy from one who is just looking: what a mortgage pre-approval is and isn't, what to ask for before showing the property and how to word the financing condition in the arras contract.

How many home purchases depend on a mortgage in 2026

According to the Consejo General del Notariado (General Council of Notaries), 65,395 home sales were signed in Spain in July 2026, 11% fewer than a year earlier. Of those purchases, 56.1% were financed with a mortgage loan. In purchases with a mortgage, the loan covered on average 71.6% of the price, with an average amount of €183,644. A month earlier, in June, the share of purchases with a mortgage was 53.7% and the loan covered 72.3% of the price.

Put simply: more than half of buyers cannot sign the deed unless a bank lends them money, and on average they put in slightly less than a third of the price from their own pocket, on top of the taxes and costs of buying. For the seller, this means that the success of the sale often depends on a decision they don't control: that of the buyer's bank.

Data from the INE (Spain's National Statistics Institute) point in the same direction. In July 2026, 43,372 home mortgages were registered, 3.5% fewer than a year earlier, with an average amount of €180,785, 10.9% more. The average interest rate was 3.01%, and 62.3% of new mortgages were signed at a fixed rate. In the Comunidad de Madrid (Madrid region), the number of home mortgages fell by 5.2% year on year. In June, notaries had already recorded an 8.8% drop in home sales in the region, with prices 19.5% higher than a year earlier.

Sources: Consejo General del Notariado (July data published on 30/9/2026, via Alimarket), INE (press release of 28/9/2026), Banco de España (Spain's central bank; note of 1/9/2026 and first-quarter data reported by idealista/news on 18/6/2026). The Notaries measure the loan against the purchase price and the Banco de España against the property's value, which is why the figures differ.

Why banks say no, or say yes but with less money

The first reason is the cost of money. According to the Banco de España, the 12-month Euribor stood at 2.954% in August 2026, 0.840 points higher than twelve months earlier. With a higher index, the monthly payment the bank calculates for the buyer goes up, and the same salary qualifies for a smaller loan. If you want the details of how this affects repayments, we explain it in “Euribor and mortgages in 2026”.

The second reason is that banks are tightening their criteria. The euro area bank lending survey published on 21 July 2026 reports, for home purchase loans, a net tightening of credit standards of 9% in the second quarter and a net fall in demand of 15%. Banks also reported a net increase in the share of rejected applications across all borrower groups, and expected to keep tightening their criteria in the third quarter.

And the third is the law itself. Law 5/2019, which regulates real estate credit agreements, requires banks to carry out a thorough assessment of each customer's ability to repay before lending to them. It isn't enough for the buyer to be keen to buy or to love the flat: the bank has to check that they will be able to keep up the payments for years.

Lenders must carry out an in-depth assessment of the creditworthiness of the potential borrower, guarantor or surety.

Law 5/2019, article 11.1

In practice, these are the situations that most often stop a mortgage-backed purchase from reaching the notary:

• Income that is too low or too unstable for the monthly payment the bank calculates, especially with rates higher than a year ago.
• Tight savings: the buyer was counting on the bank financing more than it is willing to lend and cannot cover the difference plus the taxes and costs.
• A valuation below the agreed price, which leads the bank to approve less money than the buyer needed.
• Existing debts, such as personal loans or credit cards, which reduce the ability to repay.
• A buyer who needs to sell their own home first and doesn't manage to do so in time.
• Deadlines in the arras contract that are too short, leaving no room for the valuation, the bank's offer and the mandatory visit to the notary.

The valuation problem deserves special attention in Madrid. In a survey by the OCU (Spain's main consumers' organisation) published in January 2026 covering 60 agencies in five cities, the valuations given in Madrid were between 5% and 10% above the organisation's own estimate. If the asking price is inflated, the risk is twofold: the property takes longer to sell and, if a buyer does appear, the bank's valuation may fall short and sink the sale.

How long it takes to sell a flat in Madrid

There is no official statistic on average selling time, so the best reference is the data property portals publish on homes withdrawn because they have been sold. According to idealista, in the second quarter of 2026 only 7% of the homes sold on its portal had been listed for less than a week. In the city of Madrid, these express sales fell to 11%, from 14% in the same quarter of 2025.

Source: idealista, second-quarter 2026 data published on 6/8/2026 (Europa Press, via Bolsamanía). The percentages refer to homes withdrawn from the portal because they had been sold.

The message is clear: almost half of the homes sold needed more than three months on the market, and one in ten more than a year. On top of this, the market is cooling in the capital. In July 2026, the president of the Federación de Asociaciones Inmobiliarias (Federation of Real Estate Associations) explained that selling times had stretched from two or three weeks to six or nine, and that buyers were starting to negotiate harder on price.

Prices reflect this. According to idealista, the price per square metre in the city of Madrid stood at €6,458 in September 2026, 2.4% more than a year earlier but 1.8% less than in June. And in the first quarter of the year, 20% of the city's sale listings lowered their price, compared with 12% a year earlier. In this context, a sale that collapses after two or three months under an arras contract sends you back to square one in a slower market than when you started. For the full picture, we analyse it in “The home sales market in 2026”.

What a failed sale costs the seller

A failed sale is rarely just a disappointment. While the flat was reserved, you will usually have taken down the listing and turned away other interested buyers. When the buyer doesn't get the mortgage, you have to start again: new photos, new viewings and new negotiations, sometimes with buyers who saw the listing the first time round and wonder why it's back.

• Lost months: the length of the reservation plus however long it takes for another solvent buyer to appear.
• Fixed costs that keep running: IBI (property tax), the waste collection charge, community fees, utilities, insurance and, if you have one, your mortgage payment.
• A possible price cut to revive interest, especially if the market has cooled in the meantime.
• Linked plans that go wrong: buying your next home, a move, money you needed for something else.
• Personal strain: more viewings, more calls, more uncertainty.

And the deposit? It depends on what the contract says. If arras penitenciales (a deposit that allows either party to withdraw) were agreed, article 1454 of the Civil Code allows the buyer to withdraw by forfeiting what they paid, and the seller to do so by paying back double. But if the contract includes a financing condition and the buyer proves the refusal as agreed, that clause will normally provide for the deposit to be returned. That is why the deposit alone rarely makes up for the time lost. What really protects the seller is choosing the buyer carefully and wording the clause well.

Table: how much each unsold month costs for a flat in Madrid

To give you an idea, we take a 70-square-metre flat in the city of Madrid. At idealista's average price for September 2026, €6,458 per square metre, it would be worth about €452,000. The IBI and waste charge amounts are the average bills given by the Ayuntamiento de Madrid (Madrid City Council) for 2026; the rest are reasonable assumptions that you should replace with your own figures.

Sources: Ayuntamiento de Madrid (2026 tax bylaws, note of 23/10/2025) for the IBI and waste charge; idealista (September 2026 price) for the value of the flat. Community fees, utilities, mortgage payment and the percentage price cut are illustrative examples, not average figures.

The biggest figure isn't the monthly cost but the price cut. At 3% of €452,000, the seller leaves €13,560 on the table, more than all the costs of half a year combined. And if you were planning to buy another home with the proceeds of the sale, the cost of a delay can be considerably higher than this table shows.

What a mortgage pre-approval is and what it isn't

A pre-approval, also called preconcesión or preanálisis in Spain, is an initial assessment the bank carries out using the information the buyer provides: income, savings, debts and the approximate price of the home they are looking for. It shows how much the bank might lend them and on what indicative terms. It's a good sign, because it shows the buyer has done their homework, but it is not a finalised loan.

A pre-approval comes before there is a specific flat and before the valuation, and the bank still has to check the paperwork. A legal analysis published in 2026 sums up a mortgage's journey in these stages: pre-assessment, valuation, offer, FEIN, deed and signing. The pre-approval is only the first step on that list.

The document that really commits the bank is the FEIN, the Ficha Europea de Información Normalizada (European Standardised Information Sheet, known in English as the ESIS). Law 5/2019 requires it to be provided, together with the Ficha de Advertencias Estandarizadas (FiAE, Standardised Warnings Sheet), at least ten calendar days before the contract is signed. In addition, the buyer must visit a notary of their choice for advice no later than the day before the loan deed is signed, and the valuation costs are paid by the buyer.

It shall be regarded as a binding offer for the lender during the agreed period until the contract is signed.

Law 5/2019, article 14.1.a), on the FEIN

Sources: Law 5/2019, articles 14 and 15 (BOE); Banco de España, guide “Qué tengo que saber si voy a pedir una hipoteca” (What I need to know if I'm going to apply for a mortgage); Legal Fournier (June 2026).

For the seller, the takeaway is practical. A written pre-approval is an excellent filter for deciding who to show the property to, because it rules out anyone who hasn't even spoken to a bank. But until the buyer has the FEIN, the sale still carries risk. That's why the pre-approval and the financing clause in the arras contract complement each other: one helps you choose and the other protects you if something still goes wrong.

How to screen buyers before showing the property

Screening doesn't mean distrusting everyone or asking for private information. It means asking, before the viewing, the questions you'll have to ask before signing anyway. These are the steps we recommend:

1. Ask for proof of financing before the viewing: a written pre-approval stating the amount, or proof of savings if the buyer is paying without a mortgage. You don't need payslips or detailed bank statements; a document backing up the figure is enough.
2. Do the maths with them. If the loan covers on average 71.6% of the price, for a €452,000 flat the buyer would need to put in about €128,000, plus taxes and costs. We explain these in “Costs of buying a home in the Comunidad de Madrid”.
3. Ask whether the purchase depends on selling another home first. It isn't a reason to rule them out, but it is a reason to agree different deadlines and conditions.
4. Check the identity of whoever is going to enter your home. It's a matter of safety and, later on, also a requirement at the notary's office.
5. Ask about timings: whether they have already chosen a bank, whether they have requested the valuation and when they could sign.
6. Ask for offers in writing, with the price, payment method and, if it depends on a mortgage, the amount they need and when they expect to have it.

A serious buyer won't be offended by these questions; on the contrary, they usually appreciate knowing from the outset that the sale is being taken seriously. And anyone who can't answer any of them is probably not yet in a position to buy, however much they like the flat.

Time-wasters at viewings: the cost that doesn't appear in any statistic

No official body publishes how many viewings come to nothing, but anyone who has sold a home has experienced it. Every viewing means tidying up, adjusting your schedule, travelling if the flat is empty and opening the door to strangers. When the person coming in has no financing, hasn't sold their own home or is simply “having a look”, all that effort is wasted.

Besides the time, there's safety: showing your home to someone whose identity nobody has checked is not ideal, especially if you live there. And there's a less visible effect: viewings that lead nowhere create the impression that nobody is interested in the flat, which pushes many sellers to lower the price too soon. These are some signs that you may be dealing with a time-waster:

• They don't know how much a bank would lend them and haven't spoken to one yet.
• Their purchase depends on selling another home they haven't yet put on the market.
• They don't want to give their full name or a phone number before the viewing.
• They ask to see the flat “just in case” without having read the listing carefully.
• They avoid talking about timings or how they're going to pay.

The financing condition in the arras contract: how to word it properly

The arras are the deposit the buyer pays to reserve the property. The OCU points out that there is no fixed amount, although it is unusual to pay more than 10% of the price, and that the consequences of arras penitenciales must be agreed in advance and refer to article 1454 of the Civil Code. It also advises that any special condition, such as returning the deposit if the buyer doesn't get the mortgage, should be stated expressly in the contract.

The most common mistake is settling for a generic phrase such as “subject to obtaining a mortgage”. A 2026 legal analysis warns that this isn't enough and that a bank's refusal does not automatically return the deposit: everything depends on what the contract says and what the buyer can prove. A good clause usually includes at least these points:

• The minimum loan amount the buyer needs for the purchase to go ahead.
• The deadline for applying for the mortgage and the deadline for getting an answer.
• Which banks will be approached and which document proves the refusal or the insufficient approval.
• How and within what period the buyer must notify the seller of the refusal.
• What happens if the valuation comes in below the price or the bank approves less than requested.
• What happens if the buyer doesn't give the bank the necessary documents or lets the deadlines pass.
• The consequences in each case: return of the deposit, forfeiture or an extension of the deadline.

The deadlines have to be realistic. Between the delivery of the FEIN and the signing alone, the law requires at least ten calendar days, to which you have to add the valuation, the bank's assessment and the visit to the notary. A deadline that's too short puts the buyer in a tight spot and often ends in extensions or disputes; one that's too long leaves your flat tied up for months. The sensible approach is to agree a timetable with intermediate milestones and have a lawyer review the wording before signing.

Industry practices that lead to failed sales

Not every failed sale is the buyer's fault. Some are set up to fail from the start, through practices worth knowing about so you can avoid them. The OCU's January 2026 survey of 60 agencies in Barcelona, Madrid, Seville, Valencia and Zaragoza found commissions of between 2% and 6% of the price, averaging 5%, often advertised without the 21% IVA (VAT). Only five of the 60 agencies provided a sample contract when asked for information, and in some cities it was common to charge the buyer a commission as well.

This doesn't mean all agencies work this way; many do things well. But there are practices that, whoever they come from, increase the risk of a sale falling through:

• Setting an asking price above what the bank's valuation will later say.
• Arranging viewings without first asking about the prospective buyer's financing.
• Using generic arras templates without a well-worded financing condition.
• Pushing for the reservation to be signed quickly without checking the buyer can make it to the notary.
• Quoting commissions without VAT or without making clear when they are paid.

The alternative isn't complicated: a realistic price, a buyer checked before the viewing and an arras contract designed for your sale. If you're just starting out, in “How to sell a flat in Madrid in 2026” we go through the whole process step by step.

How we do it at Llavely

At Llavely we talk to every buyer before showing your home: what they're looking for, when they want to buy and how they would pay (with a mortgage, with savings…). We check their ID before the viewing and we carry out the viewings ourselves: no time-wasters, and you follow each one, with our team's feedback, from your private seller portal. If the buyer needs a mortgage, we put them in touch, at no cost to them, with a mortgage broker. And before the reservation or the arras, we ask them to prove the source of their funds, as required by anti-money-laundering law.

Offers arrive in writing and you see them in your portal, where you accept or reject them. Our specialised lawyers, included in the price, draft the arras contract with a clear financing condition, prepare the deed and come with you in person to the notary on signing day. You only pay if you sell, on the day of the notary signing: 2.5% + VAT, all inclusive. No extra payments and no hidden costs.

Let's be honest: talking to every buyer before the viewing doesn't make it impossible for a bank to say no, because the final decision comes with the valuation and the FEIN. What it does is let you start the sale with buyers who know how they're going to pay, and make sure that if something goes wrong you're protected by a well-drafted contract. If you'd like to sell this way, ask for your free valuation: we get back to you within 24 hours (we reply in English by email, message or phone), see the property and give you the price.

Frequently asked questions

Sources

1. Home sales record seven consecutive months of decline in July, data from the Consejo General del Notariado (General Council of Notaries) (Alimarket, 30 September 2026)
2. Home sales fall again in June with prices at record highs, Notaries' data (idealista/news, 27 August 2026)
3. Hipotecas sobre viviendas (Home mortgages), July 2026, press release (INE, National Statistics Institute, 28 September 2026)
4. Official reference interest rates for the mortgage market, August 2026 (Banco de España, 1 September 2026)
5. Euro area bank lending survey, July 2026 (ECB, Banco de España translation, 21 July 2026)
6. A shift in the mortgage market? Riskier loans and the share financed fall, Banco de España data (idealista/news, 18 June 2026)
7. Ley 5/2019, de 15 de marzo, reguladora de los contratos de crédito inmobiliario (Law 5/2019 of 15 March regulating real estate credit agreements) (BOE, Official State Gazette)
8. Qué tengo que saber si voy a pedir una hipoteca (What I need to know if I'm going to apply for a mortgage) (Banco de España)
9. 7% of the homes sold on idealista in the second quarter were listed for less than a week (Europa Press in Bolsamanía, 6 August 2026)
10. Estate agencies say high home prices are forcing negotiation and lengthening selling times (Europa Press in Bolsamanía, 14 July 2026)
11. Home prices in Madrid in September 2026 (idealista/news, 2 October 2026)
12. 14% of sale listings lowered their price during the first quarter (idealista/news, 26 May 2026)
13. The City Council lowers IBI and approves the waste charge for 2026 (Diario de Madrid, Ayuntamiento de Madrid, 23 October 2025)
14. Template contract for arras penitenciales (deposit allowing withdrawal) (OCU, 5 May 2025)
15. Arras with a mortgage condition: how to protect the deposit (Legal Fournier, June 2026, updated July 2026)
16. Estate agencies: survey of prices and services in five cities (OCU, press release, 28 January 2026)