Buying a Spanish Property - How Do You Finance It?
Once you have decided on the home you wish to buy you need to
know how to finance it. There are several ways in which you can
do this. If you are lucky enough to have the cash in the bank
then you don't need to worry about the actual financing of it -
however take a look at the section on exchanging your money as
this could save you a lot of money. If you don't have the
finances readily available how do you finance the property?
The main ways are * Arranging a Spanish Mortgage * Arranging a
mortgage with a UK lender * Re-mortgaging your existing property
* Builders finance
Arranging a Spanish Mortgage Most Spanish banks will lend to
foreigners providing they can prove an ability to repay. Prior
to applying you will need a bank account and, although banks
don't insist you have an account with them- they would obviously
prefer it if you did.
The requirements are similar to the UK. Banks will lend upto 70%
of the property value to foreigners (80% in some cases though
this is now harder with a tightening market). However, this
depends on the bank, the director and the property. It is easier
to get a high mortgage on a new or nearly new property than it
is to get a small mortgage on a ruined Finca needing a lot of
work - banks don't appreciate the potential value of the
property - only the current value.
The bank will require proof of income and in some cases your
outgoings. Therefore you will need your pay slips for the
previous 3 months and proof of outgoings. If self-employed
you'll need to show accounts for the previous 2-3 years.
Most banks insist on life insurance and most mortgages are
repaid over 10-15 years but they can extend to 30 years in
exceptional circumstances, however most banks will insist on
repayment before the age of 70. It is also possible you may need
a guarantor - I for example had to guarantee my parents mortgage
as they are both retired (although their pensions were more than
I earned).
Spanish banks charge from 0.5% - 3% of the mortgage value for
taking a mortgage with them (it isn't enough that you're paying
interest as well). It's possible to reduce this if you persist -
so ask your bank - you may get a discount on this fee. (If you
don't speak Spanish ask your agent to do so- but beware he may
be getting a commission from the bank and may be reluctant to.)
You will need to think about the monthly cost when transferring
money to Spain for the mortgage. If you have bought to let then
the rental should cover the monthly repayments. If not then you
may be as well looking into transferring money through a
specialist- such as http://www.currencyuk.co.uk - who have
provided our clients with excellent service in the past.
Currency fluctuations and transfer fees can cost you a fortune
and your bank is not the best to deal with - they have little
experience in the currency market. For example a friend bought a
house here and her Euros cost her