Mortgage in Spain

[gregory]

Hi all,
We are a British couple who are looking to purchase a Farm/Finca in the near future and we are going to Spain on the 16th Feb to have a look at some properties. We have just been advised that we may be unable to get a mortgage to buy a rural/rustic property in Spain, as most lenders will only give mortgages on new/urbanization properties.

Does anybody have any experience of this
Bye

[harrison]

Hey Gregory,
There are two kinds of mortgage, one as a non resident which you can borrow approx 70% and as a resident 90% +. Of course they will also want evidence of income. On fincas they do a valuation so if the finca needs renovating they will only lend on the actual today worth of the building, no extras for improvements. A friend of mine who has a successful business down here met this problem. Anything over 20 years old they class as old. I have just brought a finca, but the location is good, as I have sea and valley views and not far from Marbella, so it should hold its value. If you buy in some hick town away from anywhere you may have a problem. When you are borrowing don?t forget to add the 10-12% taxes onto the price also, some people forget. Also make sure of electricity, water, phone, as in some areas people have been waiting 3 years for a phone...... This applies on the Costa Del Sol. In Valencia you have to watch about land grabbing, i.e. they can take your land from you for developments etc, I hear their are more problems in that area. So be careful.

The banks will do their own surveys of the property, but make sure you have a good lawyer also, as I have heard sometimes the property title isn?t always transferred to the new owner which can cause major probs. So a good lawyer is essential.

Before buying, spend some time in the area to see if you really like it do your homework and be careful who you trust, especially other English or foreigners. Learn Spanish as soon as you can, if you are living in the country the natives won?t speak English, and you will feel isolated otherwise and less independent. Another tip is to find out when you buy who the current owners use for plumbers and other tradespeople, as the person will have knowledge of the property.

Good luck

[Glyn the Lawyer]

Hi,

In my experience it certainly the case that lenders are more reluctant to lend larger percentages on rustic properties but they will normally in principal grant financing. As the other writer has commented it is wise to undertake thorough research and I always suggest to clients that before they commit substantive funds and time they ask their bank whether they would grant financing and at what percentage.

This may mean that a buyer needs to incur a valuation fee but this is far cheaper than risking the loss of a deposit if you fail to complete.

Regards

Glyn Moran
Partner
CB Legal & Fiscal Consultants
Tel.: +34 966 472 660 / +34 699 838 795 / Fax: +34 966 472 510
info@legalandfiscal.com / Costa Blanca Legal and Fiscal
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CB legal & Fiscal Consultants represent clients across Spain. A full list of members is available on request.

[greg]

Gregory,

I must agree with the others. Banks have become tougher lately with mortgages and especially rustic and commercial property buyers are noticing this! Start your research at the banks, then once you know how much they would give you go for the property hunt.

Good luck

[eyeonspain]

gregory, I don't see why you worldn't get a mortgage. The only thing is that the mortgage is relative to the value of the property, not the price at which you buy it, so it depends on the value that a valuer will give it.

Probably best to speak to a good broker as some banks have limited mortgage products to offer.

Regards

Justin
Spanish property forums - Talk to buyers of off plan investment property Spain

[SharonW]

Hi Gregory,

There are many banks that will lend on 'rustic' properties, some up to 80% LTV. However all banks have different criteria. Some will lend on LTV regardless of purchase price, some will lend on LTV but to a max of purchase price, some will lend on purchase price or valuation, whichever is the lower!!

It is also important to note 2 things:

Some banks will only lend on the building, not the land.
All banks will only lend on the registered, legal size of the property.

The Nota simple for a property will confirm the last point. Always use an independant for your purchase.

Hope this helps!

Regards
Sharon
sharon@tmasspain.com

[Goldberg Global]

I think it would good to get a mortgage experts view on mortgages in Spain.
There are 2 main products in Spain - Interest only or capital repayment mortgages in Spain.
Borrowing Rates differ if you are resident or non resident.

There have been some aggressive new products like interest only, self certified mortgages up to 60% of the property price, or 30 year interest only.

Mortgages normally are calculated on an official valuation done by the banks valuation team. Different banks can have different valuers, so a valuation done by one bank may not be valid for another.

If you want a standard or typical mortgage then you will have to provide proof of income etc.

The banks *in my opinion, are not as good as UK banks for financing. But interest rates are lower in Europe, by about 1.25% so it is still probably better to finance in the EU.

The benefits of a mortgage is that it cuts your wealth tax you pay each year, inheritance tax, and by taking a mortgage as a buyer, you have more security in a deal. Why, because the bank wont give you money unless the property is correct.

So when you get a mortgage. Normally you pay a set up fee 0.5% to can be as high as 3 or 4% *rip off, 1% is about the norm.

If you need advice, send me a PM etc.

[DirectEstates]

Hi

This is almost correct, it depends on the property really, does it have an existing mortgage for example? If so, the mortgage company would not lend against the property until that mortgage is cleared, they do mortgage properties in the country but you cannot borrow as much on country properties compared to villas/townhouses/flats in towns or cities.

Perhaps we can help you at Direct Estates, we have a good mortgage calculator featured on our website.

The best way to find out if you can mortgage a property is to get the mortgage company out to see the house, view it and value it, get yourself a good lawyer and get a copy of the Nota Simple and Escritura to him/her so they can assist you.

Direct Estates Calahonda

[Goldberg Global]

Can any one else contribute on mortgages

[anna2]

You shouldn't have a problem getting a mortgage for a rustic property. Your income situation is more of a factor than rustic vs new build. One thing I would say is that developing a good relationship with your bank manager is much more important in Spain than in somewhere like the UK. A good lawyer is essential but use your common sense in terms of assessing the threat of a new development coming along and ruining your purchase.