Mortgage for investment property in Spain

H

hakouna

Registered User
Messages
145
Did a bit of search in AAM before posting , couldn't find an updated answer so apologies in advance if it is duplicate .

Is there any Irish bank that gives mortgage for investment property in Spain , I checked with couple of banks , no joy . I can pay 30-40% deposit for a relatively cheap unit of 55K .

Thanks
hak
 
No bank (to the best of my knowledge) will give a mortgage here for a property in Spain. Real celtic tiger stuff that and even then the mortgages were usually given on properties here to release funds to purchase the property abroad and not actually on the foreign property. Practically impossible to repossess if necessary. Not to mention all the people now stuck with increased mortgages on their homes that they can't pay and properties abroad that won't sell either.
 
I doubt an Irish bank will help you with this. Even in the boom times they were unwilling to finance directly the purchase of foreign property - however, they did allow people to release equity in their Irish properties and use that to fund the purchase.
I doubt many Irish banks will allow an equity release for this. You may even struggle to get a term loan - I have had experience of that in the recent past.
Perhaps you could try your credit union, however your repayments and interest rates will of course be higher, so that might damage your business case.
Have you considered the option of borrowing the money in Spain - while there is no guarantee that the banks there will help you, it might be an option worth exploring?
 
One thing, have you actually visited the area where the property is? Some of the ghost estate are actually ghost towns over there and would make some of the ones down the country here seem like the city centre.
 
Thanks for your feedback and advises. I asked a local state agent and was told taking up a mortgage in Spain is a lengthy process for non-resident . Remortgage and equity release is not a winner with my current Irish lender . And yes , I spent 2 weeks this summer there and did my basic research , defiantly will go there again . and that was the case with many Irish/UK families we met . SO for asking price 55K (could go at least 10% , but lets consider this as purchases expenses) , was offered 2K net profit every year from management company for 6 months summer use include yearly tax and bills + 2 weeks for me to use the unit every August . New toilet to go in before buying , white good are 2 yrs old , management company to make necessary maintenance . Still need to see rental agreement before making final decision. Any advise ?

THanks
hak
 
Hi Hakouna,

You could consider purchasing a repossessed property direct from one of the banks in Spain. That way they will give you a mortgage quicker on a property on their own books.
 
That's great idea . Any clue how to chase it ? any links for repossessed property from banks ?

Thanks
 
€2k net profit?? You are aware revenue here will want some of that? check maintenance costs, Spanish holiday & local taxes, financial costs to do returns, any hidden issues, legal or construction...........
 
I would double and treble check the projected profits. They seem high for a small outlay. Assuming that it's based on what an estate agent tells you, I would be very careful. Remember their goal is to sell as quickly as possible so as to get their commission.

Have you looked at some of the Spanish property websites to see what rents are like for similar properties to yours in the same area? Are the rents in line with what you are being told? Are there alot of rental properties?

I am a landlord of two Spanish properties and have found the tenancy laws there to be different to here in Ireland. Have you had a chance to research that?
The problem that most landlords worry most about is what happens when a tenant won't pay the rent. In this case the tenant can stay in the property and the landlord has to issue court proceedings to get them out. These are costly and time consuming - it usually takes approx. 8 - 10 months to get them out. You have the right to go after the tenant for the unpaid rent, but that is also complex, time-consuming and costly and many decide not to do it. You would need to ensure that you could meet the mortgage/loan payments if this happened to you.

I am not saying don't do it. There has been a massive property crash in Spain and there are great bargains to be had right now. BUT you need to research it. Good luck with it.
 
Apologies if I didn't make this clear , the 2K profit from Spanish management company paid to me is before Irish tax , I presume I won't be liable to Spanish tax?

The unit I am looking at is a 35m studio in an aparthotel of total 125 units on a seaside town . The property to be leased to the management company that runs the hotel for 6 months over the summer period , I can use if freely the other 6 months , lease is for 5 years , they source tenants and rent the unit on weekly basis , I don't get involved on renting the unit , part of the deal I can use the unit 2 weeks a year during high season.
The management company (hotel) pays yearly tax , swimming pool maintenance , water bill , electricity bill for 6 months only , and pay me back 2K every year .

Did a research on Spanish websites , as far as I can see there are 6-8 studios up for sale from the same aparthotel , rent varies 350-500 during the season per week .

My concern is, if down the road I disagree with the management company for any reason , being in Ireland , I might struggle to rent it on my own , or is it possible for a separate company to manage a single property within an aparthotel ? would the hotel have the rights to stop me from making a deal with an external company to manage my unit ?

Thanks
hak
 
There are a number of site that allow owners to rent out their units in situations like that. You'd generally need to hire some sort of management company locally anyway to look after the day to day stuff while rented.

I'd get someone familiar with the contract to look over it. I've spoken to someone who had a similar property but was paying the company every year as there wasn't enough tenants. Contract had a get-out clause. Also you are probably liable for on-going maintenance of the property itself such a painting or replacing things like the washing machine. They all add up.
 
You must log in or register to reply here.
Back
Top