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Investment Finance In Spain

Some of the financial options below will need to be considered when planning your investment strategy for a property in Spain. Financing your Spanish property investment could be in the form of your own cash resources or, more commonly, a mortgage or equity release scheme. Spain has a well established mortgage market for non-residents with all banking products that you would expect back home.


1. Mortgages

We will gladly point you in the right direction of Spanish financial institutions that will finance your investment. We have access to mortgages from over 30 Spanish and offshore banks, while the final choice depends solely on your circumstances.

Options currently available:

Low repayment - interest only

  • Up to 15 years interest only
  • Up to 70% final valuation
  • No redemption fees
  • Interest charged on daily basis
  • Term up to 40 years
  • Up to age 80

Low deposit - 80% valuation

  • Up to 80% of final valuation
  • Low initial interest rate
  • Term up to 35 years

Bridging loan for purchase of new property

  • Up to 100% value of new property plus costs
  • Payment holiday for first three months
  • Interest only up to the end of the third year if unable to sell old property
  • Before the end of 3rd year pay off debt on old property with no redemption fees

Low repayment - self-certification

  • Up to 50% of final valuation
  • Up to 5 years interest only
  • Minimum proof of ability to pay

Self-certification - self-declaration

  • Up to 40% of final valuation
  • For individuals who are unable to prove their earnings – self declaration
  • Up to age 75 – 80.
  • Term up to 35 years
  • Self-signed letter and copy of passport

Low repayment - equity release – re-mortgaging

  • Up to 60% valuation
  • Interest only up to 15 years
  • Term up to 40 years
  • Up to age 80
  • No redemption fees
  • Equity release
  • Up to 70% valuation
  • Interest only for up to 2 years
  • Term up to 30 years
  • Up to age 75

Click here to get a Spanish mortgage quote

Documentation required

Spanish banks base their lending decision upon your net monthly income. Pay slips, tax returns and/or details on current accounts are all required as verification of income amounts. They will often also require the following documentation depending on your circumstances:

EMPLOYED:

  • Last P60
  • Last 3 month’s pay slips
  • Last 6 months bank statements
  • Employers reference confirming your role, length of service and current salary or copy of your employment contract

SELF EMPLOYED:

  • Last Self Assessment Tax Return
  • Accountants Reference confirming gross and net income, plus drawings last year.
  • Bank Statements

COMPANY:

  • Incorporation deeds
  • Registration documents for Company (if SL Company)
  • If in Spain, C.I.F. number

RETIRED:

  • Confirmation letter from pension provider or pension slips.
  • Bank statements for last three months
  • Last Self Assessment Tax Return/ P60
  • All applicants must provide a copy of passports, NIE number and a bank reference.

Proof of income

We can help you obtain a loan of up to 50% of the valuation of your Spanish investment, with a minimum amount of proof of income. Initially, lenders require a bank reference letter, a copy of your passport and a signed self-declaration.

100% financing

It may be possible to raise 100% finance, depending on the valuation of your property. Such financing is normally more available for off-plan property investment as during the period between agreeing the purchase price and the completion date, the value of the property will normally have risen. Some banks will base funding on this final valuation and it may mean that 100% of the purchase price can be raised.

Raising funds to build property

You can now raise funds for both the land and building work. As long as you have all the relevant building licenses, permission and architect’s plans, the lender will advance payment in stages as the building work progresses. During this time, you will pay only the interest due on the loan.

Re-mortgage facilities

You can re-mortgage provided you only have a small mortgage outstanding. However, remember that as you will be creating a new mortgage, costs for both cancellation of your existing mortgage and the setting up of the new mortgage will higher than you are accustomed to in the UK (normally around 4% of valuation).

Financing the deposit for an off-plan property

A mortgage in Spain can only be set up once the property has been completed and registered with the local land registry office. You cannot, therefore, raise the amount for the deposit, at the initial stage, through a loan on that property. Normally, investors raise this deposit either by cash they already have or by releasing equity on existing property they own in the UK. However, as the loan on completion can be based on the final valuation of the property, some of this cost may be recouped upon completion.

Mortgages in a company name

In theory, you can take out a mortgage on a property held by an S.L. Spanish company, an offshore company or a UK company. However, this process is more complicated than doing it in an individual name. Through our valued financial experts in IPIN, investors are assured of the best professional advice when taking out a mortgage in a company name.

Time scale of application

Based on our experience of Spanish lenders and the mortgage application process, you will normally get a verbal indication within one to three days of whether your application is likely to be successful. This is subject to receiving the full application, required documentation and a valuation. Once all the paperwork is sent to the bank the full process should take approximately four to six weeks.

Provision of funds

This is a detailed list of all the costs involved in your purchase and you should receive a detailed breakdown and explanation from your legal adviser before you go to the Notary. This list includes the following:

  • Tax on the mortgage deed
  • 5% of the Capital Gains liability of the vendor (in the case of non-residents)
  • All fees (notary, registry and gestoria) for both the purchase and mortgage deeds
  • Stamp Duty (for new properties only).

Click here to learn more about financing your Spanish property with a mortgage.

Click here to get a Spanish mortgage quote

2. Equity Release

Put simply, equity release is a way of releasing some cash from the home without having to sell up and move house.

If you are in your mid-50s or older and own your own home, you may be able to get a cash lump sum, a regular income, or both, by using an equity release scheme based on the value of your property. These schemes can be helpful in certain circumstances to raise money for a mortgage to finance your Spanish property investment.

Click here to learn more about financing your Spanish property with equity release.

3. Alternative Finance

Not everybody falls into a category and some investors will need to raise finance in an alternative fashion to equity release or mortgage options. There are other borrowing facilities available to investors of Spanish property.




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