Have you ever dreamed about owning a Property in Alicante?
You will find many of the UK lending Banks offering spanish mortgages through their spanish branches and affiliated banks in Alicante province.
The dilemma most people are faced with is whether to finance a property in Spain with a spanish mortgage or buy re-mortgaging their home in the UK.
Mortgages Spain - UK banks
Banking with someone you know and trust could make the difference.
Higher interest rate
Higher deposit for the property
You may not receive favourable terms from a UK banker as most of them are unfamiliar with investing in Spanish property
The terms of repayment for UK mortgage ranges from 5 years to 30 years
Mortgages Spain - Spanish banks
Spanish banks offer several plans so be sure to evaluate them all before you make a final choice. You will find that competition between Spanish banks is quite stiff. Therefore, you can negotiate with several banks and they will do everything to better the offer of the other bank.
Spanish banks will not allow you to show projected incomes especially on rent.
Your mortgage or your liability is in the same currency as your property or your asset.
Interest rates are lower for a spanish mortgage so your payable monthly interest will not be very high.
Deposit required is about 20% lower than in the UK
If you want to rent out your property it helps if your income is in the same currency as your interest payment.
Interest on most spanish mortgages is pegged to the Euribor which is the benchmark rate for the european money markets.
The terms of repayment for spanish mortgages range from 5 years to 40 years
Types of mortgages Spain
As in other countries such as the United Kingdom the vast majority of mortgages sold in Spain (to both spaniards and foreigners) are variable rate mortgages.
This means that mortgage repayments vary according to the base rate set by the european central bank. Borrowers with variable rate spanish mortgages cannot be certain what their mortgage payments will be in the future. If the interest rate falls they will pay less, but if it rises they will pay more.
Most lenders also offer a fixed rate mortgage. These tend to have higher interest payments in the short term but if interest rates rise a fixed-rate mortgage holder might end up paying less than would be the case with a variable-rate mortgage.
At the very least they give borrowers the ability to know exactly what their mortgage repayments will be for a set time into the future.
Some mortgage lenders also offer a mixed mortgage that involves a certain period (for instance 5 years) of fixed interest payments, and a floating rate thereafter.
Recently some lenders have started offering an interest only mortgages under which borrowers only pay interest on the loan in their mortgage repayments, and then return the capital either at the end of the mortgage or at some point in the future during the lifetime of the mortgage.
This kind of mortgage can be very interesting for foreign investors who plan to rent out their property to cover the mortgage costs and do not plan to hold it for more than 10 years.
Lenders have increased the lifetime of mortgages that they are prepared to lend (depending upon the age of the borrower). Where as in the past most mortgages were for between 10 and 30 years now most lenders offer mortgages up to 40 years or even longer.
Longer mortgages reduce the size of monthly mortgage repayments and therefore stimulate demand for spanish property by making it accessible to a wider market.
This fact, along with the reduction of interest rates to historical lows and the number of foreigners buying property in Spain, have been primary drivers of the spanish property boom in recent years.
Commercial Mortgages Spain
As a rule the banks or lending companies in Spain will only lend money against a fixed asset not the turnover or projected turnover of a business.
This means that when you approach the Bank for a Spanish Commercial Mortgage you must be buying a Freehold Property.
You will also be expected to put up a deposit of at least 40% and in many cases 50% of the value of the property.
If the property that you are trying to organize a commercial loan on is a Spanish Leasehold property then you will be required to place a separate guarantee with the Bank.
For most people the only way or raising enough money to use as a deposit is by using their existing home as security or by remortgaging their existing home.
As with Residential Mortgages in Spain Commercial Mortgages are for a pre determined time period at an interest rate that is usually pegged against the Euribor. The Euribor is the rate of interest as set by the European Money markets.
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Find everything you need to get a Spanish mortgage for your dream house under the sun in Alicante.