Financing a Property in Spain

When considering the purchase of property in Spain, it is worth doing research on the different financing options. For instance, many banks do not accept property located in another country as collateral for loans. This leaves a buyer looking for financing with two alternatives: a loan from a bank in the country of residence with local collateral, or a loan from Spain where the property being bought is accepted as collateral for the mortgage.
 
Competitive Spanish Loans
Much due to the recovery of the Spanish economy, the local banks are today financing properties on very competitive terms. One can get a mortgage on as much as 60-80% of the value of the property. Also, the margins on the loans are low.  By adjusting the length of the credit, one can fix the monthly mortgage payments to a suitable level.
 
When a desired property has been found, the loan application will require the following details: income (salary, pension or similar), information on possible assets and banking history in the country of residence, a copy of a valid passport or any other ID and, naturally, information about the property itself. The bank will make a decision based on the applicant information as well as an evaluation of the value of the property. 
 
On occasion, the bank requires a life or home insurance. For the monthly payments, an account will be opened at the lending bank. 
 
Example: a 20-year mortgage from a Spanish bank, interest rate 2,25%.
 

New property, price

165 000 €

Other expenses approx. 13 % (taxes etc.)

21 450 €

Property price with expenses

186 450 €

Down payment / cash

86 450 €

Mortgage

100 000 €

Monthly payment

518 €

 
Monthly instalments from rental income
It is common to cover the monthly mortgage instalments in part or wholly with rental income during those times when the owner is absent. New, modern and practically furnished apartments are in high demand, especially during the holiday season. 
 
Please get in touch with us if you’d like to discuss your financing options. Call us at +34 640 609 863 or send an email to riikka.aukee@grupomercal.com
 
Please get in touch with us if you’d like to discuss your financing options. Call us at +34 640 609 863 or send an email to riikka.aukee@grupomercal.com