Obtaining 100% mortgages in Spain

Probably because the last few villas of the developments have remained unsold, one forward thinking developer has recently released 5 villas on two developments on the Costa Blanca (Guardamar), and Costa Calida (Sucina) on an excellent scheme – 100% mortgage including costs. The only money payable up front is a 3000 Euro holding deposit – although of course you have to pay the mortgage after.

Due to the rising costs here in Spain, it’s a pity that more don’t jump on the ‘100% mortgage’ bandwagon – especially as recent research shows that many people in the younger age groups are now looking to invest in property in Spain, generally the group with less ‘spare cash’. Spain is the perfect getaway for young working couples to own a holiday home - being only two hours away from the uncertain British climate and ideal for a long weekend away from the hectic pace of UK life.

However if you don’t fancy buying in Guardamar or Sucina, there are other ways to obtain 100% mortgages on property in Spain. Although the majority of banks will lend only 70% to non-residents, some are now upping that to 80%. Given that this amount is based on the valuation, rather than the purchase price, the amount offered can be 100% in some cases.

An example is the purchase of my own property. The asking price was 250,000 Euros, however the valuation came in at 368,000 Euros. At the 80% lending rate, the mortgage offer was 294,000 Euros giving me 100% mortgage plus the 10% costs and money left over for improvements.

Mortgages in Spain can now also be obtained up to 35 years, depending on age.
When you receive your mortgage offer, it is advisable to use it to ‘barter’ with other banks as often, another bank will improve on your original offer.

Buying off plan is also another excellent way of getting a good mortgage offer – if you have the initial down payments to start with. It is usual with off plan property to have paid 50% within the first 3 months after reservation. However, when the final 50% is due on completion, you should be able to borrow 70-80% of the final valuation. With a development taking up to 2 years to complete, and taking into account price rises over that period, it is quite likely that you will be able to borrow 100% of the intial purchase price.

Alternatively, if you already own a property in Spain that is mortgage free, you can borrow against it and often get enough for 100% mortgage for a second property.

I am not saying its easy to get a 100% mortgage in Spain, just that it can be done. A lot depends of the individual valuer and the bank used, and the type of property being purchased. As valuations are based on the m2 of the plot and the property, by and large the best type of property is a villa on a spacious plot although again, this is not always the case as we have a couple of spacious ‘key ready’ apartments that have been valued well over the asking price.

For help and advice on Mortgages, or property purchases in Spain please contact debbie@spanish-villas-spain.com.

Golf Properties & golf resorts Spain

There is now an increasing demand for high spec golf properties in Spain with additional leisure facilities such as golf courses, watersports, and amenities on site. This explains the surging popularity of 'golf properties' in recent years as they are usually of outstanding design and stylish modern construction as well as having the added bonus of on site facilities and amenities.

Owners of golf properties in Spain will usually have the benefit of a championship standard golf course on their doorstep, plus hotels, spas, indoor swimming pools, horse riding centre, shopping mall, sports centres, water activities, schools and medical centres as well as 24-hour security. (each golf resort will differ slightly).

Murcia is quickly rising in popularity due to the increasing number of top golf properties available and the number of golf courses it boasts such as: Covera Golf and Country Club, Roda Golf and Beach Resort, Peraleja Golf, Nueva Ribera, Hacienda del Alamo and La Serena Golf & Beach Resort - not to mention the six Polaris World golf resorts. Each of these resorts include a championship standard golf course, as well as superb landscapes and leisure facilities.

Mojacar in Almeria and Granada on the Costa Tropical, which were previously relatively undeveloped, have been recently introduced to the masses due to the number of new resorts and golf properties being constructed in these areas. The Medina Elvira Golf Resort in Granada offers an 18 hole championship golf course just ten minutes from the centre of Granada and 25 minutes from Sierra Nevada, whilst the magnificent Desert Springs in Mojacar offers 27 holes surrounded by water features, beautiful green fairways, cacti and rugged desert terrain. Other top golf courses in Almeria include Playa Serena, Almerimar Golf, and the 27 hole yet to be release Ballabona Golf and Country Club designed by European Golf Design & Sam Torrance.

With budget airlines now offering low cost flights to these areas, prices for high quality golf properties are starting to increase, although still remain lower than the more popular 'costa's'. However, golf properties in Spain represent excellent value for money as you are purchasing a 'lifestyle' rather than just a property.

Double-Your-Money Property Investments in Spain

On the Costa Calida, Costa Almeria and Costa Blanca among many other extremely popular property locations all over Spain, property investors have had an amazing run of success in recent times.

This is really the main reason why foreign property investments have continued to flow into Spain at an enviable rate.

It has been reported that in some areas property prices rose last year by a staggering 30 per cent. These are the sort of rises in value that have enabled most property investors in Spain to comfortably and easily doubled their money in the last few years. Whatever the other shortcomings, you really cannot argue with that kind of investment performance.

The result has been that this kind of performance has kept demand for property all over Spain high, and with it the value of property also tends constantly to be on the rise.

It is widely predicted that these trends are set to continue for several years into the foreseeable future. There are several solid reasons for this:

For instance, the Spanish government has aggressively promoted a policy of encouraging tourism. This in itself has greatly helped to keep demand and prices for high quality property high. The Spanish authorities have also pushed for international investment into the country, as well as construction as their main strategy to keep the economy growing at the rates currently being enjoyed.

Also, these trends are tipped to continue in Spain, even as other newer investment destinations in Eastern Europe and elsewhere have clearly proved to be rather risky and dangerous - and in some cases it has become clear that there is very little protection of investment interests. A case in point is Russia, which has witnessed capital flight as some investors have hurriedly left over some widely publicized bad experiences.

Many of these foreign investors have opted to fall back on more secure and established investment destinations with longer track records of performance and investor interests protection.

Spain fits such a description, perfectly.

At Spanish Villas Spain, we have a selection of property for sale on the Costa Blanca, Costa Calida and Almeria

New Legislation Has Made It Safer To Invest In Spanish Property

There is no greater fear than the fear for the unknown and when one is making a serious investment in a foreign country where the language spoken is different, there are a lot of unknown factors. This usually causes a lot of fear and feelings of uncertainty on the side of most foreign property purchasers.

In recent years, in Costa Calida, Costa Almeria, Costa Blanca and other very popular property locations all over Spain, property prices have been steadily climbing at amazing percentage rates. This has naturally attracted hordes of property speculators as well as serious investors who have ended up seeing their investments regularly double in value. This as all sounded too good to be true for many, while other potential buyers have nervously kept a loose eye on this market looking for the catch.

However a closer look at the facts on the ground will go a long way in reassuring and helping to rid them of the fear, which is mostly unfounded in this amazing property investment destination.

To start with, Spain is a member of the EC (European Community) and is very serious about attracting investment, which the rapidly growing Spanish economy badly needs. All this is happening behind a backdrop of growing competition for foreign investments amongst many countries all over the world, more so as most of the former communist controlled Eastern Europe has started opening up and trying to rebuild their delicate economies in a free market system.

To cap it all, there is probably no better evidence of the intentions of the Spanish authorities to attract and keep foreign investments, than the recent developments in the enactment of laws. Legislators in Spain have recently passed a law that specifically addresses property sales and building standards in that nation. This law will go a long way towards making Spain an even safer investment destination for property buyers from all over the world.

Spanish Property Prices

Despite rumours that the bubble has burst on the Spanish property market, recent figures suggest that this is not true. Many Estate agents have found that the market Is slowing, but one of biggest banks here in Spain believe that there is little change that property prices will fall, unless there is a sudden increase in interest rates which is unlikely at the present time. Prices have not fallen in Spain for seven years, and recent increases are seeing average property costs rise to 1.78 per m2, making it more expensive than this time last year – an increase of 12%.

However, the fact remains that property sales are slowing because now affordable property is out of the reach of many. Whereas the main purchasers of property were the Spanish, foreign buyers are now pushing up prices beyond their means, especially for first time buyers – similar to what has happened in the UK.

Although many are turning to other overseas investments, Spain is still the number one destination for Brits who, it is estimated, will buy another 150,000 over the next three years.

Alternative Methods for Building in Spain

As Spanish property prices rise, many are looking for a cheaper alternative to the traditional build methods. Pre-fabricated properties or log cabins provide cost saving holiday homes, but are often not ideal for permanent living.

You will often see new building projects that have been started here on the Costa Blanca, where the owners have simply underestimated the true cost of building in Spain, and ran out of money before being able to complete. Property may stand half built for a number of years, or be put back on the market for someone else to take on.

With more than 20 years experience of building in Scandinavia, Canada, Germany and the USA, a well known and proven technology now offers a new style of building in Spain. These exceptional timber frame homes offer buyers a unique opportunity to purchase a new Spanish property at a very affordable price, well under the cost of a traditional build.

The purchaser will discuss his requirements with the builder and select everything from initial design to plaster, roof, internal wall colours, sanitary facilities, glaze and terracotta. There are over 60 customisable models to choose from, meaning that each house is unique.

Prices start at 800 Euros per m2, rising to 850 per m2 for properties 100m2 or less. A property of 100m2 would therefore be 85,000 Euros, whilst a large property of 130m2 would cost only 104,000 Euros.

These alternative build timber frame properties really do offer you, the buyer, the chance to buy an exceptional property in Spain at half the cost of a conventional build property.

See example models and specifications for building cheap Spanish Property

Viewing Spanish Property

The Viewing Process
Contacting as many agents as you can before leaving home is not a good idea, from either your point of view or theirs. As you initially made contact regarding properties on their books - probably by email, they will start calling you once you arrive in Spain to arrange/confirm viewings. If you are carrying a UK mobile, this will cost you approximately £1 a minute. The more you contacted, the more will call - eventually costing you (and them) a considerable sum. Many agents also have the same properties on their books and it is possible that without a prior agreement of your viewing schedule, that you will waste both your time and theirs being taken to the same property more than once.

Cramming in as many viewings as possible a day is also a bad idea. By the end of the day, you will be unlikely to remember which property is which. Most agents will advise viewing a maximum of 5 per 'session' so you can spend time mulling over what you have seen.

If you know you don’t like the look of an area or property when you approach it/walk in, say so – agents appreciate honesty. It is better not to spend half an hour looking round a property that is of no interest.

If you have built up a rapport with an agent via email or telephone before you visit Spain, my advice is to stick with them. By the time you arrive, they will (or should have) a very good idea of what you are looking for and will have built a portfolio of suitable properties to show you. Many people complain that they send requests for further information to agents who either don’t bother to reply- send details of a totally different property way out of their budget – don’t fully answer their queries etc.etc. If this is the case, move on to another agent. Work with an agent that has time for you and all your queries. By the time you arrive in Spain, it is advisable to have your viewing schedule arranged and appointments set up with just a couple of agents.

Unfortunately, what often happens is that after agents have spent weeks corresponding with clients answering queries and sending property details, viewings are arranged, and the agents have booked all the appointments – the clients arrive in Spain, look in Agents windows/meet other agents/meet friends who know someone who knows someone…..and never turn up for the viewings. Still, that’s another story – the Life of an Estate Agent in Spain.

Buying the right property in Spain

Many people are looking at the property purchase process the wrong way round. They find properties they like the look of, then plan their viewing trips. They may never been to a particular part of Spain before, yet have decided they want to buy a property there. Reading an agents description and looking at photos is just not enough, you need to visit any particular area first to get a feel for it. Spend some time there, get to know the local area, the people, find out what is on offer for holidaymakers or permanent residents.

Location

We all know that location is important, but requirements differ according to the reason for the purchase. For someone who is using a property in Spain for investment purposes only, the criteria will be totally different from the person looking for a permanent home.

The most important points to establish from the beginning are:

1. The Location
2. The right type of property
3. The use of the property

For Investment Property
New developments, or 'off plan property' can take 2 to 3 years to complete, which means that they are constantly increasing in value during this time. Investors can sell on the property at any time before completion, thus making a profit without paying in full for the property. I have know people to buy knowing they do not have the money to complete on the property should they be unable to sell before completion. This is a big risk as there are no guarantees. Do your homework thoroughly, check out area plans with the local town hall to be sure that no tower blocks will be built in front of your new villa, or a sewage plant is not planned for the plot next door! Off plan property in Spain >>

For Rental Property

When buying a property in Spain to rent to holidaymakers, location is the most important consideration. Successful 'buy to rent' property depends on a variety of factors - distance from the beach, airport, shops, local entertainment, the style, standard of the property and facilities, the availability of a pool, are all key factors that will influence the success of your holiday letting business. Obviously, a town apartment in an inland area is unlikely to generate the same level of interest as a seaside villa with a private pool in a top holiday spot!
A country villa with an outside toilet and a water well a mile down the road may be ideal for your holiday home, but it is unlikely to be a holidaymakers dream property.

As rental agents, we are finding the trends for holiday makers have changed over the past few years. 3 years ago, anyone who owned an apartment in Spain could rent it for most of the holiday season. Not so today. The supply for holiday apartments completely outstrips demand and many are left empty during the peak season. Whereas, a holiday apartment near the beach used to be so popular, many are now opting for ‘out of the way’ country or mountain villas. In a general breakdown, the requirements for 2005 were as follows:

70% of holiday makers are looking for a private 3 bed villa with a pool.
20% for a 5 or 6 bed villa (It is cheaper for 2 families than booking two individual villas)
10% for 2 bed apartments.

There is now a huge demand for long term rentals (i.e. 11 months +), which differ from the above, as people renting are not looking for the holiday lifestyle. They may need a different type of property – storage space, outside space, convenient shopping facilities. It is not necessary to be close to the beach, but being able to walk to a local shop can be important if they have to do it on a regular basis. Long term renting is often dismissed by owners as rents can be pretty low, however they will provide a regular year round income, as opposed to the uncertainty of holiday rental income.

For Permanent Living

Buying a property for living permanently in Spain means you have to make serious choices on not only the type of property that will suit your needs, but whereabouts you want to live. Not only the area, but the type of area that it is. Do you want to live amongst the Spanish, the British – or a bit of both. There are many expat communities, especially on purpose built urbanisations for those that want a ‘home from home’ lifestyle but in a sunnier climate. Alternatively, do you want to live in the ‘real Spain’, adapting to the Spanish way of life and speaking the language?

Bearing in mind reselling and re-purchasing costs, a wrong decision could be costly. My advice in this situation would be to take a long term rental in the area in which you are considering buying (if you can get one – they are few and far between!), and making sure you know exactly what you are letting yourself in for. Living amongst the Spanish can be difficult if you are not prepared to learn the language, but living amongst other expats can also have its downside.

Holiday Home

Buying a holiday home purely for yourself and your family is the easiest choice of all. With only two hours travelling time from the UK, even a long weekend isn’t out of the question. It can be anywhere as long as it suits your needs. A mountain villa, a rural retreat, a city pad, or a beach apartment – you have no-one’s needs to consider except your own. The only point to consider is that your holiday home may only be used for short periods of time and some properties will need more maintenance and security than others.

Choosing the ideal property in Spain can be exciting, but often difficult. It’s a big investment and you want to get it right. Once you have the basic criteria, talk to people, ask advice from local agents. I have heard stories from property owners who have been told that a particular property has ‘excellent rental potential’, however this often turns out not to be the case. If you are buying to let, talk to a local letting agency – they will offer impartial advice, after all they will not be getting a cut of the agents commission!

Spanish Property in Spain

So you have come to the decision that you want to buy a property in Spain. Okay, now the decision has been made – what’s the next step? Ah – look on the Internet, enquire about properties that look similar to what you had in mind, and send enquiries to as many agents as you can find requesting details and brochures. Two weeks later you are knee deep in property details and what started as a simple decision is now turning into the most indecisive time of your life. Why? Information overload.

There are literally thousands of properties available all over Spain – every type of property in Spain that you can think of, so you really need to take a step back and think about the exact type of property and location that will 'tick all your boxes'. The three most important considerations are:

1. Location
2. The right type of property
3. The use of the property (see Buying the right property)

Sometimes an agent may offer you a property that suits your basic requirements but is not something you would have chosen for yourself. Leave your options open - if there are some aspects that you like, it is often worth looking at anyway. It will give you food for thought and help in the selection process. You may even find you love it, and a completely different type of property or location has been bought to your attention. Very rarely have people picked a property from the internet, come over and bought it!

What you think you want is often not what you want. It happens time and time again – people’s requirements change once they look around. For instance, last week I had 10 properties lined up for viewing with a client – all 3 bed villas with pools in and around Denia. He wanted a spacious house, but wasn’t concerned about the plot size as he said he wanted the outside area to be ‘low maintenance’. After 3 days here, he realised that outside space was very important to him and his criteria changed. In instances such as these where you have a fixed budget, compromise will often have to be made – bigger plots mean bigger prices!

You wanted a front line villa – okay, for those with a high budget – but ask the agent if you can sit on the terrace at night, it may be perfect by day but at night all you see is pitch black.

As an estate agent here in Spain, I see the same mistakes made time and time again which can can amount to considerable cost to the purchaser. I'm not referring only to the purchase itself, it's also the viewing process where errors are made. (see Viewing property in Spain).