Like every edition of Second Home Expo, many Dutch and Flemish people are tempted by beautiful houses on one of the Spanish Costa’s. Spain has so much to offer; sun, sea, beach, culture and not forgetting the delicious food. A lifestyle everyone could quickly get used to.

Saving hardly pays off these days so why not buy a holiday home in Spain? Enjoy the good life while investing in something that hopefully yields more than 0.01% interest. Buying a second home with your savings seems obvious, but of course it is not for everyone.

So how do you go about it and who do I need? A lot of expertise can be found at Second Home Expo when it comes to buying Spanish homes, but what about financing it?

Financing a house in Spain

If you are going to buy a house in Spain, we are soon talking about a big investment. Besides the purchase, there are also all the additional costs. Think of the costs for the estate agent, notary, lawyer and not forgetting the transfer tax. In Spain, depending on the region, this can easily be between 8% and 10%.

Many buyers therefore consider taking out a mortgage on a second home in Spain. And why not? Besides savings rates, mortgage rates are also very low. Besides, having some of your own savings behind you is a nice thought. In short, time for an orientation.

Often, one’s own bank, accountant or financial adviser is consulted first. Research shows that since the crisis, Dutch banks and lenders no longer finance Spanish property through a Dutch mortgage. Too risky and due to too few applications, they lack local expertise.

Missed opportunity you might say, the crisis is long over and the Spanish housing market has been on the rise for years. Besides, figures from the Spanish statistical office show that 52% of Dutch people buying a (second) home take out a Spain mortgage. Plenty of opportunities right? Apparently not. So what now?

There is an option to take out a ‘box 3 loan’ on your current Dutch home but only if there is sufficient surplus value. So that doesn’t apply to everyone. And is that even good advice? Suppose you want to move in a few years? Can I then move that loan with you? With the trend of declining maximum loan amount mortgages (now 100% LTV, loan to value) on Dutch homes, that doesn’t actually seem like good advice for the future.

A mortgage with a Spanish bank?

With the right guidance from a Dutch specialist in this field, this can be done well in Spain, through Spanish lenders. There, too, interest rates are low and banks are well attuned to clients from Europe. Taking out a mortgage in Spain is of course different from in the Netherlands. It is not very complicated but it is different. The Spanish language can also play a role. Deed of sale, mortgage deed, valuation, it is difficult enough to understand in Dutch, let alone in Spanish.

Spanish banks globally finance between 60% and 70% (as a non-resident) of the purchase or appraisal value of the property, whichever is lower. If you have been resident in Spain for at least two years, this can go up to 80% LTV. (loan-to-value). So you will have to contribute the remaining part of the purchase price plus additional costs from your own resources.

Furthermore, a reservation of financing is not standard. It is wise to have the lawyer arrange this with the sellers. Should you not include this in the purchase contract without the security of getting a mortgage, you could lose that 10% deposit if you don’t get the mortgage. Quite a financial risk, then. So having someone to manage this with the lawyer and the bank is crucial.

After all agreements have been laid down in the purchase contract and the 10% deposit has been paid, a deadline is agreed to arrange the Spain mortgage.

Theoretically, you could do this yourself but given the complexity of the application process, the language barrier, the time pressure and coordinating with all parties involved (lawyer, estate agent, notary and bank), this is not recommended. So engage a specialist in this field who will arrange this in your own language. Surely, understanding a long-term commitment sleeps a lot more peacefully. Besides, you will receive better terms and a better interest rate. That’s a quick payback.

Why hire a mortgage adviser in the Netherlands and play ‘Columbus’ on your own in Spain. Of course, we all find programmes like ‘Ik vertrek’ very entertaining until it involves yourself. So engage a specialist in Spain mortgages.

If you are planning to buy a holiday home in Spain, be sure to visit the Second Home Expo. Besides the diverse offer, you can talk to estate agents and developers. You can also attend a seminar, of course. That way, you will be fully informed in 30 minutes.