January’s Spanish mortgage example on a Spanish property worth €99,900

2020 is finally here, and with the new decade comes the thought of new year’s resolutions and the possibility of investing in your dream property in Spain. We’ve based this month’s Spanish mortgage example on buying a property under €100,000.

Will a Spanish mortgage be right for you?

If you’re undecided whether to take out a Spanish mortgage to help you afford your Spanish property, you should consider the following benefits:

• Pay off your mortgage with no penalties – Offsetting the low value of the £ sterling, so once the exchange rate improves you can pay off your mortgage with no penalties.
• Quicker process – You might be able to afford your property sooner by taking out a Spanish mortgage.
• Repay with rent – If you are hoping to let your property, the rental returns can help pay towards the mortgage repayments.
• Bigger budget – With excellent Spanish mortgage rates available, you may have the opportunity to increase your budget and purchase a home in Spain that’s bigger and/or better.

Spanish mortgage example 1

In our example, we have calculated a Mortgage Loan-To-Value of 65% and allowed for the additional fees such as taxes, community fees and the legal fees that you will incur when you buy a Spanish property, to give you a more realistic mortgage figure.

Property price – €99,900
Estimated closing costs including all taxes & bank mortgage set up fees at approximately 15% – €14,985
Therefore the total cost of purchase – €114,885

Funds needed to complete (including 35% deposit value & fees) – €49,950 @ an exchange rate of 1.17 = GBP £42,692 vs. exchange rate of 1.11 = GBP £45,000
Mortgage value (LTV) 65% – €64,935
Cost per month over 25 years @ 1.90% interest rate – €275.23 @ an exchange rate of 1.17 = GBP £235.24 vs. exchange rate of 1.11 = GBP £247.95

In summary, you could buy this Spanish property using a 65% mortgage with a combined deposit and fee costs of €49,950 and monthly instalments of €275.23 over 25 years.

Spanish mortgage example 2

In our second example, we have calculated a Mortgage Loan-To-Value of 55% and allowed for the additional fees such as taxes, community fees and the legal fees that occur when you buy a property.

Property price – €99,900
Estimated closing costs including all taxes & bank mortgage set up fees at approximately 15% – €14,985
Therefore the total cost of purchase – €114,885

Funds needed to complete (including 45% deposit value & fees) – €59,940 @ an exchange rate of 1.17 = GBP £51,230 vs exchange rate of 1.11 = GBP £54,000
Mortgage value (LTV) 55% – €54,945
Cost per month over 25 years @ 1.90% interest rate – €232.89 @ an exchange rate of 1.17 = GBP £199.05 vs. exchange rate of 1.11 = GBP £209.81

In summary, you could buy this Spanish property using a 55% mortgage with a combined deposit and fee costs of €59,940 and monthly instalments of €232.89 over 25 years.

*Please check with an officially registered  currency exchange  company, such as our partners at CurrencyAgain.com , for up to date exchange rates. The figures shown are for guidance purposes only.

Financing your Spanish property in the UK

It’s very common to see individuals who prefer to keep their finances close to home when investing in property in Spain. If that’s the case for you, our recommended UK-qualified financial advisors will be more than happy to help you. From loans, remortgages and equity releases, they can assist you in your  property purchase  and ensure the process runs smoothly from start to end.

Currency transfer

When buying overseas it is important to have plans in place on how to transfer funds to pay for the property. Some buyers decide to use their bank but this will typically be charged at higher rates than a specialist currency broker.

We would recommend using a specialist such as our partners at CurrencyAgain.com  as savings on the exchange rate can be used to pay additional costs such as legal fees and furniture packages.

Obtaining a Spanish mortgage on a property

If you’ve decided that a  Spanish mortgage  will be the best option for you to purchase your dream home, Spanish Legal Homes can help you move this process forward. The bilingual experts at  Fluent Finance Abroad (FFA)  will take some of your stress away by liaising with the top high-street banks in Spain to get you the best exchange rates.

Search homes for sale in Spain under €100,000 »

Article courtesy of Spanish Legal Homes - www.spanishlegalhomes.com