Spanish mortgage market heats with foreign buyers
The Spanish housing market is showing signs of improvement as foreigners look to invest in Spanish property and mortgage lenders ease up funds again.
This eagerness to lend – and to clear distressed properties from their books – has seen one bank offering 100 percent mortgages for new properties, with an additional cashback option of up to 13 percent. Variable rate mortgages are de rigueur in Spain, with over 95 percent of customers opting for them, according to Mortgage Direct. While fixed rate mortgages are popular in countries such as the UK, in Spain they remain largely uncompetitive with variable rate options, which tend to offer rates of at least 2 percent lower.
With overseas buyers included in those able to benefit from mortgages available in Spain, the options facing would-be holiday home owners have improved dramatically over the past year. Martin Dell, Director of leading Spanish property portal, Kyero.com, comments, "As well as the traditional British market, Spain is also attracting buyers from an increasing number of French speaking countries, as well as further afield. It is a perennially popular country, offering an excellent cuisine, welcoming climate and some of Europe's most delightful architecture. Second home owners look to Spain for everything from exquisite city apartments in the finest locations to luxury island villas with unrivalled sea views."
Many buyers are specific in their mortgage requirements, as Kevin Monger points out, "We do notice that a lot of clients from France and French-speakers from Belgium and Switzerland ask about fixed rates and interest rate caps. Fixed rate mortgages are more prevalent in these countries compared to Spain."
However, just because they are technically available to foreign buyers doesn't necessarily mean that those buyers are in for an easy time when it comes to obtaining a Spanish mortgage. Many mortgages for non-residents are complex and time-consuming to apply for and their conditions may change over the lifetime of the mortgage.
"Be sure to consider a range of borrowing options before you commit to buy," suggests Kyero's Martin Dell. "Think through the advantages of obtaining a mortgage in your own country as well as those of a mortgage here in Spain. Fixed rate mortgages in Spain, for example, are less attractive for many overseas buyers than they are for Spanish nationals. They are also less attractive than variable rate mortgages, so borrowers need to consider their interest rates carefully and ensure that they shop around for the right mortgage product."
AB Property markerting / Kyero.com / Expatica