If you are buying your dream home with a mortgage from a Spanish bank, you should be prepared as the process will take some time and banks will be extremely strict with having all documentation in place. Preparing early and having your mortgage in place, will make the process much easier and give you peace of mind.

Buying property

The bank in Spain will typically request that you submit specific documents with your application, although a dedicated person from the bank’s customer relations will help you throughout with your documents and make all the necessary arrangements.  It is usually expected that you will provide a copy of your passport, proof of address documentation such as a utility bill, an NIE certificate, if you are employed, they will need at least 2 of your last wage slips, your annual tax statement, and 2 annual tax returns, last 2 years annual accounts, an accountant’s or employer reference, credit report, last 3-6 months bank statements, mortgage or rental agreement relating to the main residence. Whatever they require, they will first assess it and then they might respond with potential questions. After this, they will offer you a provisional approval on the condition that your property is valued, and it corresponds to the amount you are asking. The valuation takes a week. The bank branch submits your application to their risk department for a final approval which will be provided in writing.

Building a house

A similar process is followed if you are building  a house, as the value of your land and projected costs for a house will be assessed and cross-checked by a professional surveyor who will visit the location and provide their valuation to the bank.  By this time, you will need to have had architectural plans approved by the building authority and have a general estimate of your overall costs, so you present the bank with a clear and realistic number. If you do not manage to do so, this will create delays and more paperwork, so it is good to have a clear communication with your bank from the start and understand what is needed. Whether you are signing your contract with the bank or an independent third party will evaluate your property, you will be required to cover the costs. This will also include any fees for lawyers, especially if you do not speak the language, as the bank will arrange for a lawyer to be present to translate any papers you need to sign.

Total costs

The total costs of buying a property with a mortgage could be around 3%, as you will have to pay an arrangement fee (1% of loan as standard), valuation fee (approx. €500.00) and mortgage stamp duty (around 1.1%).

The interest rates in Spanish banks are attractive and relatively low, with an average rate around 2.75%. It is important to consider that banks now might offer a loan that covers only 60% (non- residents) to 80% (residents) of the purchase price or of the appraised value of the property (the lowest value prevails).

When buying a finca or rural property the maximum mortgage will be 60%. The rest you will have to finance yourself with your own resources, whether that means you need to increase your mortgage in your home country or with personal savings.

Spanish banks also take into account your family situation, whether you rent your home or have your own property, number and age of children, type of work, income, etc.

When applying for a mortgage in Spain, banks will look at the relation between your income and debt to assess your situation and decide how much you are able to pay per month. For example, the bank will consider around DTI of 30-35% (up to 40%) and for non-residents, the accepted DTI will be 25-35%.

If you are a British buyer, a currency specialist such as Universal Partners FX can help you navigate the current market while taking into consideration your specific needs, goals and your budget.

When considering buying your dream home in Spain, Universal Partners FX can give you peace of mind when sending money overseas. If you want to schedule ahead and safeguard your funds, talk to one of their foreign exchange experts today.

Buying property  in Spain, France, Portugal, Italy and Greece is back in demand, with property site Rightmove reporting 1million searches in one day.

As travel restrictions ease, interest in buying property overseas has reignited with the number of Brits searching for a place in the sun rising. The top five property locations for Brits are Spain, France, Portugal, Italy and Greece, according to search data from Rightmove last month.  

Rightmove sees a surge in interest in European destinations

Rightmove’s Miles Shipside said: “Lockdown has allowed many people time to re-appraise their lives, which has prompted lots of home-hunters to get serious about buying elsewhere in Europe. In particular, countries such as Spain, France, and Portugal have cultures that are familiar to us, and their warmer climates and reasonably priced rural stock will appeal to those who have been recently denied foreign travel.”

He added: “Social distancing would be far more straightforward if you’re lucky enough to be able to afford your own overseas pad. If other holiday-makers feel the same, then they may wish to rent your property, helping it bring in an income when you are not there. It’s still early days as we’re not out of lockdown yet and most airlines are still shut, but this is an indication that this has been a life-changing period for many who are re-appraising both how and where they want to live.”

According to Rightmove, enquiries to estate agents overseas reached the highest level since last June, with the number of new users on “Rightmove Overseas” being 41 per cent higher than the same month last year. Rachel Beaton, an overseas property expert at Rightmove, said that with the easing of the travel restrictions the demand for overseas homes rose to “record-breaking levels.”

Particularly, searches for property in Spain increased by a quarter compared to last June, with many estate agents reporting a surge in online browsing and enquiries for overseas homes in the month of June.

Estate agents at Savills told financial website This is Money that “its most viewed home online in Spain over the last month was a remote five-bedroom £572,475 home in Andalucía, complete with sweeping views of the surrounding countryside, 10 hectares of land, a large swimming pool and an olive tree lined driveway.”

Spanish digital platform allows Brits to apply for a mortgage online

With interest in Spanish property rising, Spanish retail bank, CaixaBank, is providing its online platform HolaBank for Western European citizens considering buying a property to apply for a mortgage. The new digital platform comes after the release of digital mortgage application MortgageNow, another service which allows potential international buyers of Spanish property to apply for a mortgage from their country. Clients eligible to use the MortgageNow are European residents with an interest in purchasing a property in Spain.

 

In 2019, the Spanish Land Registry reported more than 62,000 property purchase agreements, particularly focussing on the Mediterranean coast, a number that represents 12.5% of the national total.

If you are considering buying your dream home, you should contact a foreign exchange specialist to assist you with transferring your money abroad, explain currency exchange, and hedge your funds from unpredictable currency movements. Get in touch with Universal Partners FX so you can have peace of mind when sending a large amount of money overseas. If you want to schedule ahead and safeguard your funds, talk to one of their foreign exchange experts today.

Overseas Property Investment

For some, overseas property investment provides some hard-to-turn-down benefits such as greater claims to capital growth and increased rental yields than buy-to-let property in the UK. Making it a very lucrative opportunity, as well as providing investors with the added advantage of having their very own holiday home that they can visit. If the right decisions are made at the right times, overseas property investment can offer huge financial rewards.

But, before you can pursue your goals of owning a property abroad, there are several things that you will need to bear in mind, such as taxes surrounding property ownership, foreign laws, rent charges and more. So, let’s take a look a some of these things in more detail.

Location, location, location

For newcomers to the property investment game, the location of where their investment will be made is often the first thing to think about. To make your investment a successful one, you’re going to have to think long-term. Many experts will reiterate the fact that certain locations have the reputation of being property hotspots, where if timed properly, you will be able to snatch a bargain when prices have fallen. However, it is advised to invest your money in more established markets that offer longer-term benefits and sustained returns.

General overseas property investment considerations

When looking for the perfect property to invest in, there are a number of things that you will definitely need to think about. These include if your property will be used as a holiday home. If it will be rented out. If the cost of living will change over time and if certain foreign ownership laws will be involved.

If you’re choosing to rent your property out as a holiday home, you’ll need to ensure the property is easily accessible with good local amenities and is located in a popular area with local tourists. Be sure to take holiday seasons into account as many tourist destinations shut down and become quieter during ‘out of season’ months.

Be sure to look into properties of a similar nature in the surrounding area to get an idea and taste of what the general rate in the market is. Despite global property price trends occurring, it is important to know how property markets in specific locations are performing and they themselves can go through peaks and troughs. Take time to learn how many weeks per year similar properties are occupied, to give you an idea of what to expect if and when you decide to proceed with your overseas property investment.

Mortgages

It can be difficult to find the right financing option when buying an overseas property, especially since some countries might not offer financing options at all. In some parts of the world, banks cannot accept a foreign asset as a security loan, so you may not be able to get a standard mortgage from your domestic bank the way you would for a local property purchase. Other international regulations may prohibit banks from even initiating the process with a client regarding a mortgage if the client is based in another country. So, what’s the best way to get a mortgage for your overseas property investment?

Whilst traditional bank financing might not be an option for overseas assets like it is for domestic property purchases, developer financing may be available when there aren’t any other options. Other payment methods may be available such as using retirement funds or pulling equity from your primary residence in your home country. You may also qualify for personal or business loans that you can use to pay for your overseas property down payment. A number of UK banks offer mortgages for international borrowers if you are able to maintain a minimum bank balance at a designated threshold.

Taxes

The amount of tax that you will be required to pay on your overseas property investment needs to be factored into your decision-making process. Some countries impose property taxes, others do not. Some countries may also levy taxes if you leave your property vacant for a certain amount of time in the year. If planning to rent, you may be required to declare that rental income to your home country and the country where your property is located. Unless there are double taxation agreements in place, you could find some issues with tax in two separate countries. When preparing to sell your property, you’ll need to be aware of both domestic and foreign taxes on capital gains. Foreign taxes are complicated and consequences can be steep for failing to declare assets that wouldn’t otherwise be taxed.

Maintenance

When buying an overseas property to make a profit, there is no need to relocate permanently. Meaning your property may well be empty for a significant amount of time. As a result, you will need to think about maintenance and security. One of the best ways to do this is to employ a local property management firm that can make regular visits to check on the premises and conduct the relevant duties to keep the property in a good condition. Despite this requiring some additional investment, it can help to save huge amounts of money and safeguard your assets.

Overseas property investment resources

A vital part of investing successfully and safely in overseas property is finding and taking appropriate advice from the right people. An overseas property management firm is a great start but ultimately is just one cog in the machine. To ensure you get the most out of your investment, you’ll need to tap into a variety of different areas, gathering the expertise from various professionals. Such as:

  • Financial planning & tax advisor
  • Independent legal advisor
  • International accountant
  • Currency transfer specialist

By securing the services of these different resources, you will be able to identify and prevent potential money-losing situations during your overseas property investment journey, especially when it comes to sending money overseas. Universal Partners FX can help you get more for your money when the time comes for you to transfer funds abroad with our bank-beating exchange rates, zero transactions fees and 24/7 expert support.  

Our simple-to-use online platform allows you to send your funds swiftly to a chosen recipient in a secure manner. Whether it’s a one-off or a regular payment, we can you to save money by avoiding high street bank transaction fees and poor exchange rates. Simply sign up for a personal or business account with us today to get started on your overseas property investment. Click below to learn more about how our foreign exchange services can help when buying a property overseas.Buying a Property Overseas >