Buying your second home in Spain – Part 2
In our first blog in this series we discussed the initial steps you should take when looking for a second home in Spain. This blog continues with advice on taking out a mortgage on your new venture.You will find out information on lenders and different types of mortgages with specific advice on Spanish property sales.
We have already given you general advice on buying your second property in Spain but this blog seeks to go into more detail regarding the money side to the venture. Dealing with rules and regulations in a different country can be challenging and you need to be aware of all the stages and options you have ahead of you. As we stated in the previous blog, it is important to employ professionals who specialize in Spanish property sales and/or land laws. Protect yourself as much as possible at this stage to avoid hassle later in the deal.
Before you choose a property, you should be aware of how much you can afford and how much you can put down as a deposit. Once you have chosen your property, employed a lawyer, translator and Chartered Surveyor, you need to start looking into your mortgage options.
Mortgages
Finding a lender
You need to do your research here and find the different products and services available to you from different lending companies. You should engage in a conversation with your lender of choice and ask them to clarify all of their terms, asking any questions about doubts you have in the beginning. You lender needs to have authorization to operate in Spain too. This can be found on the Bank of Spain’s Registros de Entidades.
Type of mortgage
There are several mortgages available you and you need to choose the one that is most suited to you and your capabilities. You will need to specifically focus on the interest rate, length of repayment period, additional fees and cancellation policy/fees.
Repossession
If you find you cannot keep up the payments on your property, the Spanish bank may repossess your second home and if the value of the property is less than the debt owed, aka you are in negative equity, then the Spanish bank may go after your UK assets too. Only commit to purchasing a property in Spain if you know you can meet the payments.
Signing the agreement
You need to make sure you understand your mortgage before you sign it. If this means having a third party read through the document, then do so to ensure you are happy with all the terms. You do not want to default on your payment and if, for any reason, you feel this might happen, then you need to discuss other options available to you with your lender.
Equity release schemes
The Foreign and Commonwealth office strongly advise that any parties considering entering into an equity release scheme seek independent financial and legal advice. You need to fully understand the scheme and all the rights you have after you have entered into the scheme.
Additional fees
As with any mortgage and property purchase there will be additional fees that you may not be aware of. Prepare for extra fees to be added onto your cost total such as notary fees, fees from hired professionals, mortgage fees, bank transfer fees, house insurance fees, life insurance fees, IBI Tax, local council tax, income tax, community fees and bills for your utilities.
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