Homeowners in Spain could pay less on mortgages under new proposal

Homeowners in Spain could see their mortgage payments fall if they renovate their properties to make them more energy efficient, under a new proposal that would allow borrowers to renegotiate existing loans at lower interest rates. The idea could benefit households struggling with mortgage costs while facing expensive home improvements.

This proposal is being put forward by the Spanish financial consumer association, ASUFIN, which wants banks to offer better mortgage conditions to homeowners who significantly improve their home’s energy efficiency.

Under the plan, homeowners would need to improve their property’s energy efficiency rating by at least two grades, for example from an E rating to a C rating, to potentially qualify for a mortgage with a better interest rate.

However, the proposal has not been approved, and homeowners cannot currently demand a reduction in their mortgage rate under it. ASUFIN has presented its recommendations to political parties, but no implementation date or interest rate reduction has been announced.

According to a report by Cinco Días on October 22, 2026, the plan is one of seven measures aimed at making energy-efficient home renovations cheaper and more widely available throughout Spain.

How renovating a home could reduce mortgage costs in Spain

The main proposal is to allow homeowners to renegotiate an existing mortgage after carrying out improvements that significantly reduce their property’s energy consumption.

Rather than requiring borrowers to take out a separate loan to finance renovations, ASUFIN wants mortgage contracts to include provisions allowing existing terms to be modified.

The arrangement would apply to both new mortgages and loans that are already being repaid.

For homeowners, it could provide a way to finance necessary improvements while potentially reducing borrowing costs. However, a lower interest rate would not necessarily mean lower monthly instalments if the amount borrowed increased to cover renovation work.

Potential improvements include better insulation for walls and roofs, replacing inefficient windows, upgrading heating or cooling systems and installing renewable energy equipment.

According to the report cited by Cinco Días, comprehensive energy renovations can cost between €15,000 and €40,000, making them difficult to finance for households already repaying a mortgage.

ASUFIN also proposes removing stamp duty (AJD) from qualifying mortgage modifications and simplifying notarial and property registration procedures to reduce the cost of renegotiating loans after energy renovations.

What other changes is ASUFIN proposing for homeowners?

The mortgage recommendation is part of a wider package of seven proposals to overcome the financial obstacles to improving Spain’s housing stock.

One proposal would allow investors to cover up to 100 per cent of renovation costs through property-linked financing, with homeowners making periodic repayments. Outstanding payments could remain linked to the property if it were sold, subject to the legal arrangements eventually adopted.

Another proposal would allow households to pay for new heating or cooling equipment through their electricity bills, spreading the installation cost over time.

ASUFIN also wants to improve access to financing for apartment buildings, so that the financial difficulties of a few owners do not prevent renovations benefiting the entire building.

At the European level, ASUFIN wants the European Central Bank to promote more favourable financing conditions for green loans.

Other proposals include changes to energy savings certificates so they can support financing arrangements, and stronger checks to ensure properties advertised for sale or rent display their energy efficiency ratings.

According to estimates cited in the report, upgrading Spain’s housing stock could require €20 billion annually until 2050, with 61 per cent of funding coming from private investment and 39 per cent from public sources.

ASUFIN has begun approaching political parties about its proposals. According to Cinco Días, the Partido Popular has agreed to meet to discuss them.

It is important to note that none of these measures has been approved, and banks have not been required to implement them.

Can homeowners in Spain already get cheaper green mortgages?

Green mortgages are not entirely new in Spain.

Some banks already offer mortgages linked to the purchase, construction or renovation of energy-efficient homes.

CaixaBank, for example, offers financing arrangements connected to energy improvements, while Bankinter has marketed mortgages aimed at properties meeting certain efficiency standards.

But having a green mortgage does not necessarily mean it is offered at a lower interest rate than a conventional mortgage.

In fact, ASUFIN’s latest green finance report, published in June 2026, found that green mortgages remained more expensive than conventional loans on average. The average rate for green mortgages rose from 3.78 per cent in 2025 to 4.07 per cent in 2026, while the number of available products declined.

The association pointed out the gap between the environmental aims of these products and the financial incentives they offered.

This is why its new proposals focus in particular on rewarding homeowners who substantially improve properties they already own, instead of limiting favourable conditions to the purchase of energy-efficient homes.

For those considering renovations, the first step is to find out their property’s current energy efficiency rating.

Spain’s energy performance certificates grade buildings from A, the most efficient, to G, the least efficient.

A certificate can help identify whether improvements such as insulation, more efficient heating or replacement windows could make a meaningful difference.

A homeowner can also ask their bank whether it offers mortgage conditions linked to energy renovations, but eligibility and savings depend on the lender and the individual agreement.

Before taking out additional borrowing, it is advisable to compare the total cost of the loan, including interest, fees and the repayment period, instead of focusing only on the monthly instalments.

For now, the proposal remains under consideration, with no confirmed start date or guaranteed mortgage savings. If adopted, it could give homeowners across Spain a new financial incentive to make their properties more energy efficient.