How does financing work in Spain?

Loans taken out for the purchase of real property generally mature after a term of between ten and 30 years, but often less money can be borrowed to purchase holiday real estate. Other types of loan exist, for example, to stipulate the amount of installments for the entire period of maturity, with the respective variations in the credit periods. In addition, some loans include the possibility of reimbursement of installment amounts that have already been paid. Loans are secured by registering a mortgage on the property to be financed.

In general, the amount of money loaned for the purchase of real estate for vacation purposes is lower, especially if the borrower’s main residence is outside of Spain. The purchaser is usually allowed to borrow between 60 and 70 percent of the value of the property, as established in the opinion of an expert appraiser. In individual cases, a borrower may be able to secure a higher loan. For a bank to accept an expert opinion regarding the value of the real estate for which the money is being loaned, the company that prepares the opinion must be registered with the Spanish Central Bank. All loan agreements must be executed in the presence of a notary public. In the case of new buildings, most developers negotiate the financing terms for the buyers with the bank that has financed the project. These terms, however, are not always the most favorable. Hence, it may be worth your time to compare the developer’s terms with those of other banks.

Seaside-Mallorca S.L.
Dominik Przesmycki
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07160 Paguera

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