Getting a mortgage can be a daunting prospect. The dream of a property on the Costa Del Sol can often rest on being able to secure the right finances to make that dream come true. If you’re serious about capturing the spanish home you’ve always dreamt of, then the financial element is a key undertaking in the process.
The products and options now available are numerous and the variables involved have increased tenfold in just the space of a few years. It’s therefore a good idea to seriously consider bringing in a professional mortgage advisor or broker to help you find the best package possible for you. Circumstances can vary wildly for people and mortgage providers have been quick to respond with a smorgasbord of options for the prospective property buyer.
It’s best to get your financial situation clear as soon as possible. This can ensure you don’t waste time and effort on homes outside of your budget. Having a realistic idea of your buying power with a mortgage in principle will narrow your search, making success more likely. You don’t want to be looking at houses outside your budget, which will only build unrealistic expectations. Likewise, you may be surprised by what you can afford and could be compromising your search before it’s begun.
Leaving the financial side of things too late can mean you rush and don’t find the right product. This could leave you with an expensive and inflexible loan. It’s an added pressure you don’t need when buying a property.
When buying a property in the Costa Del Sol such as an apartment in Marbella, one crucial decision to make is which country you get your mortgage from. Spain actively encourages foreign investment in property, so getting a mortgage in Spain as a non-resident isn’t a problem.
If you’re buying a holiday home on the Costa Del Sol, then as a general rule of thumb you’ll be seen as more of a risk, which means higher rates and deposits. That’s because people who have two homes will generally default on their non-permanent residence first, if they run into financial difficulties.
Most mortgages in Spain follow the European Central Bank Lending Rates Euribor, with banks generally offering at +1% above this rate. Fixed rate mortgages are much more of a rarity in Spain. It’s well worth knowing the differences involved with a Spanish mortgage. Expect to pay mortgage deed duty which is 1.8% of the loan and bank fees of 1-1.5% of the total mortgage. Once the transaction is completed all the documents will need to be signed at the notary office which will cost a maximum of 0.5% of the loan value. Then of course there will be any fees agreed with the broker.
Finding the right broker
Most markets are littered with fraudsters and con men, so it’s essential that you find a trusted a broker, once you do, they can be invaluable. Many Spanish banks will offer mortgages through individual negotiations so if you don’t speak Spanish, then working with a broker could be an essential prerequisite.
A tell tale no no is a broker that asks for fees up front. Brokers will typically bill their fees on the completion of a sale, that is to say when you’re moving in to your new Spanish property. Anyone asking for fees up front is looking to gain something for nothing. Find references from friends, ask around and speak to people in the market. Paradise Marbella are happy to share our trusted connections with our customers…. and it’s well worth doing your research at this stage.
Mortgage agents such as IMS and SPF offer a free initial consultation and banks such as Santander and Abanca also have UK offices.
Choosing the right Mortgage
There’s a lot to consider before signing on the dotted line with a mortgage. Its starts with basics, such as what kind of deposit you have to put down. The more up front capital you have the wider your mortgage options become. That’s fine if you’re buying a turn-key property and there’s nothing to be done. At the other end of the scale you may be buying a more traditional property that requires extensive renovation work. Balancing the costs of any renovation, landscaping, furnishing etc. with your initial deposit becomes a fine art.
Then you need to align your own personal financial situation with forecasted market conditions. What are the worst case scenarios for interest rate rises and can you accommodate them within your monthly budget? Is it worth pushing for a fixed rate to give you financial peace of mind? How much flexibility does the mortgage have and what does the rate change to once the initial term ends? Working with a broker means they can tailor all this to your personal needs and present you with different mortgage illustrations. This can make it much easier to differentiate between the options available to you.
At Paradise Marbella Realty we have a dedicated team of professionals who are all well connected within all elements of the property buying process. We are always available for a friendly chat to advise you on the best course of action. We specialise in finding dream properties so if you’re looking for a reputable Costa del Sol Real Estate agent capable of making your dreams come true, then look no further.