Spanish Mortgages are available to all clients while on an inspection trip. All paperwork can be actioned while on your trip. Please note most Spanish mortgage lenders limit borrowing to 60% of the total value of new property, meaning that to qualify for one you will in most cases have to have 40% cash to put down. If you need to borrow in excess of 40% then most UK mortgage lenders will offer some sort of package for purchasing foreign property. The same restrictions are not usually imposed in the UK.
There are banks and other financial companies in many countries as well as Spain that will lend money to purchase a property in Spain. They will secure the loan either on a property in your own country or on the Spanish property itself. Spanish banks in Spain will also lend funds to non-residents to purchase properties. To purchase your Spanish property you can apply for a Spanish mortgage. A Spanish mortgage will usually fund up to 60% of the value of your property on a capital repayment basis over usually a maximum term of 20 years. Another option many of our clients choose is to release equity from properties in their country of residence, this could make your Spanish property purchase much more flexible.
There are both advantages and disadvantages to obtaining a mortgage in Spain. With a mortgage in Spain, there may be high set-up costs, €2,000 - €3,000 is not unusual. You may also have to pay taxes and fees to the country where the property is located. These can be around 2.5% of the value of the mortgage. One advantage is that you will pay local interest rates which are normally lower than those in say the UK.
Be aware that if you are going to be repaying your Spanish mortgage from your usual income, you may lose a substantial amount of money in the ever-changing exchange rates. In any circumstances, you must take qualified legal advice before you sign anything. It is advisable to start the mortgage process before you look for a property. At least if you have a mortgage offer from a bank in principle, you will not waste time looking for a property you cannot purchase.
Another thing to consider when purchasing a property in Spain is, in what name(s) to purchase. You can purchase it in your sole name, with a partner or in a company name. All have good and bad points. There are substantial tax savings to be made because of the Spanish tax system and in particular, Inheritance Taxes, which can be higher than 70%. It is in your best interests therefore for the property to change hands as little as possible.
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