Buy a property in Spain, live the dream!

We’ve all seen the endless stream of programs on TV and the glitzy adverts about buying your dream property in Spain. Without doubt Spain has the climate, the relaxed lifestyle, the diversity of culture, variety of location and variety of property to make it one of most popular locations to buy property for investment purposes or to buy property to retire to.

This popularity has resulted in property prices rising sharply in recent years, that bargains are more difficult to find and that the holiday rental market is now fiercely competitive. Please don’t misunderstand me, from personal experience I can say that buying a property in Spain is living the dream but by the same token do not be under any false illusions, buying a property in Spain is difficult and stressful and once you own the property there are still many hurdles to jump. For these reasons it is absolutely vital to take your time and do your homework.

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Buy a property in Spain using your brain and not with your heart! Read as many articles on the subject as you can, talk to as many people who have actually bought a holiday property in Spain as you can and do not skimp when paying for professional advice, after all this will be one of the biggest investments of most people’s lives. You simply can’t afford to get it wrong, get it right the first time and you can live the dream.

Can I afford to buy a holiday property in Spain?

When buying a property in Spain you need to know that there are substantial costs involved. These costs range from legal costs to purchase taxes, all of these costs are payable at the time of completion as part of the sale and your lawyer will need them in his or her possession well before your completion date.

Costs obviously vary from property to property and are also dependant on tax rates and the cost of the professional advice you obtain. Typically the cost of purchasing a property in Spain is 12% of the purchase price, so the cost of buying a 200,000 Euro property would typically be 224,000 Euros.

Buying “off plan” can reduce the purchase expenses but the reduction is variable, consequently giving a figure is more difficult, I recommend working on 12% and anything less is a safety margin for you. As you can see the costs can increase the price you have to pay considerably and you must take these in to account before making an offer on a property.

Obtaining a mortgage to buy a property in Spain.

Most Spanish building Societies will give mortgages to foreigners buying property in Spain. As a rule of thumb Spanish banks will only lend 60% of the property value. Consequently you will typically have to raise capital of 40% of the purchase price of the property plus a further 12% to cover the purchase costs. These costs are obviously on top of your 60% Spanish mortgage.

Some UK lenders will give additional or second mortgages if you have sufficient equity in your home in the UK however few will lend money secured on a UK property specifically to buy property abroad.

If you obtain a mortgage in Spain bear in mind that you will pay in Euros, so you need to be able to cope with currency fluctuations and the cost of exchanging and transferring currency.

Mortgages in Spain often given at a set annual rate. It is common place to base the rate on the European Bank interest rate (Euribor), typically a mortgage rate could be Euribor + 1%

Choosing where to buy a holiday property in Spain--->