Brits Are Picking Up Spanish Property Bargains

According to leading Spanish property portal kyero.com, the economic crisis facing Europe hasn’t deterred British buyers from snapping up property in Spain. Currency exchange specialist World First says transactions for holiday home purchases in Spain more than doubled over the summer.

Mortgages

The report says however that one of the effects of the global banking crisis has been that mortgages are more difficult to secure and borrowers must put down a bigger deposit to get a loan from overseas banks.

This is Money reports that some British lenders allow homeowners to re-mortgage to fund a holiday home purchase abroad, but it will depend on individual criteria and borrowers will usually still have to have significant equity in their British home.

This is not necessarily always true, though. Michael Liggan of Altavista Property Spain points out that many of their exclusive properties come with finance pre-approved, and in some cases with up to, and even more than, 100% LTV.

For many, an overseas mortgage will be the only option anyway, but rates in Spain are competitive.

The article from Kyero mentions Frank Kyle, 32, an engineer in the oil industry, who got a bargain when he bought his new holiday home in Murcia, south-eastern Spain.

Frank, from Glasgow, paid 112,000 euros for the two-bedroom property on a popular golf resort and he is confident he bagged a bargain. His neighbour in Murcia paid 170,000 euros for a similar apartment five years ago.

He had hoped to secure the apartment with just a five per cent deposit, but he ended up paying much higher to secure a mortgage from a Spanish bank. Frank’s 4.5 per cent variable loan rate makes his monthly repayments about 378 euros.

Almost all banks now require borrowers to take capital repayment rather than interest-only mortgages.

Typical mortgage rates in Spain currently are between three and four per cent variable. But the rate offered will usually depend on a borrower’s circumstances.

Legal Advice

The property website continues with the following advice: “Independent legal advice is ‘utterly essential’. Find an English-speaking lawyer who is an expert in local property law and property taxes. Keep copies of all documentation, especially official documents.

“The property valuation is also important. Get an independent valuation of the property. Problems sometimes arise because the buyer took the word of the vendor or developer and didn’t get a second opinion.

“If you are buying from a developer, get references for their work, including a history of how long they have been selling and past customers’ experiences. Where possible check what they have built in the past and how it has survived the test of time, particularly through the recent boom and bust.

“The language barrier can be a problem and British buyers should never sign a contract in a foreign language without having it translated. Buyers who sign an English version should ensure it is an accurate translation of the original foreign contract.

“And make sure you understand properly any tax that might apply to your purchase; typically you can add ten per cent of the property purchase price to cover fees as well as tax.

“As well as local tax laws, it is important to investigate any rules and restrictions around letting property, if you are planning to use your home as a holiday let. Some areas, or even particular properties, have restrictions on letting.

“Ask your independent lawyer to investigate that appropriate planning, building and habitation licences are in place. For example, with new build developments, a property may have been repossessed because it could not be sold originally because these licences had not been granted.

“It is important not to rush the decision. Many buyers have come unstuck because they have fallen in love with an area, or particular property, overseas, but they do not do sufficient research before putting in an offer”.

(read the full article here )

Altavista Spain can help you to find a suitable bilingual lawyer. We have a shortlist of independent law firms who have already successfully helped other clients to buy their homes through us, who we’re happy to recommend.

Related posts:

1. Spanish property minister going on tour
2. Spanish Property Tax Trap
3. Michael Liggan news: Purchase Tax on New Spanish Property Halved
4. Michael Liggan asks: Spanish or British Property Lawyer?
5. Spanish Government Approves New Bill Against Black Economy