Are you looking into buying a second home in Spain? Or maybe you've already found that special gem and are looking for a way to finance it? Then you're probably wondering how you can go about taking out a loan. As you may already know, you have two options. Either you borrow from a French bank, or you opt for a Spanish bank. Today, N1 Immobilier explains how you should proceed with each of these alternatives.
A loan from a French bank for your purchase in Spain
Choosing to take out a loan with a French bank is not always easy. One of the reasons is that few banks in France offer you a loan when you want to buy a property abroad.
The need for a warranty
If, after making enquiries, you discover that your bank offers to help its customers buy a property in Spain, you should be aware that it will require certain guarantees before it will finance you. Ideally, you should own a pledgeable property in France. Only then will they grant you a mortgage.
There is also the possibility of pledging your savings as collateral. This is known as a Lombard loan.
Conditions for granting credit
The process of obtaining financing from a French bank can be especially slow. Prepare all the necessary documents in advance. And if you intend to rent out your Spanish property after purchase, you'll need to include this in your loan application. This will make it easier for the banker to study your credit file and your debt ratio, and adjust your interest rate accordingly.
In France, loans can amount to up to 90% of the purchase price of the property. Interest rates are attractive, at around 1.5% in 2022. Loan terms vary, but are generally between 15 and 20 years.
A loan from a Spanish bank
First of all, the procedure and conditions for financing with a Spanish bank are not the same for residents and non-residents on Iberian soil.
Loan conditions
While banks offer 80% financing for residents, this drops to 70% or even 60% for those whose tax residence is not in Spain, putting the borrower at a disadvantage compared to France.
As for the interest rate, it rises above 2.5%. However, you can opt for a fixed or variable rate, depending on your situation. If you live in the Iberian Peninsula, you'll repay over 40 years; if you don't, you'll repay over 20 to 30 years.
Documents required for borrowing
It's important to have a Foreign Identification Number(NIE) to take out a loan in Spain. At N1 Immobilier, we'll help you to obtain one, to make the process easier for you.
In addition, you must present the following mandatory documents:
- A presentation of your real estate project in Spain
- Proof of identity and address
- Proof of income (pay slips, employment contract, property income, statement of property assets, etc.).
- A summary of your expenses and accumulated loans
- Your bank statement
- The amount of your personal contribution and where it comes from.
With both options open to you when it comes to paying for a property in Spain, you now have the cards in your hand to take out a mortgage in the country that's most advantageous for you. If you're looking for a low interest rate and a short borrowing period, choose France. If you prefer a longer term, but a higher rate in return, choose Spain.
Contact N1 Immo to buy your property on the Costa Brava! Contact our real estate experts and we'll find you the property of your dreams.
