Second Home in Spain - Mortgage

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DeclanDublin

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Hi everyone, looking for some advice. I have my current mort. (tracker) with PTSB expiring in 2 yrs time with very little owing on it. I'm thinking about buying a small place in Spain for around the 70 -80 K mark. I have around 42K in liquid assets and around 278K in shares. I don't want to liquidate shares and be hit by a high CGT. I'm thinking about a mort. PTSB say they don't offer mort. or such low amounts. Any suggestions?
 
It's a place I visit regularly, Torrevieja about 40 mins from Alicante. I plan to spend around 70-75 K. I'm particularly interested in mortgage options. PTSB talked about a 'top up.' I suspect it won't be on a tracker tho!
 
Ok, know it, they do a half marathon every February but cancelled this year for whatever reason. An awful lot of Irish have purchased out there and property is very plentiful and cheap. Don't know why you would borrow money when you already have it although I also understand what you're saying about the CGT. Wouldn't you have to pay that tax regardless at some stage, unless you're thinking of bringing it with you?
On the other hand, flights are cheap, rentals aren't costing a lot out there and you could have a huge amount of holidays for €75k to MOST PARTS OF Spain. I know it's not a big amount of money, but think about it, there'll be plenty of other costs associated with buying and owning a property over there, never mind getting a phone call in the middle of the night over in Ireland telling you something has gone wrong.
 
If you really want to do it, why not combine your cash with a personal loan spread out over 10 years?

My question is whether the interest cost would be greater than the CGT cost of selling some of the shares? I suspect that it would.
 
Thanks guys. Yep. I'll look into the costs of finance vs the CGT costs. I really hadn't considered that, but it's worth considering. I know what you are saying re renting noproblem, but I'm thinking of moving there for at least some of the yr and teaching, so it will be home. I'll likely keep the Irish home and rent out a room as it's in a prime area. I want to keep a base ( of sorts) in IRL n any event.
 
Always fancied buying a place abroad.
My sister did that 15 years ago, and in the last 15 years, she has only ever spent her holidays in Spain.

Never experienced holidays in, France, Italy, Croatia and the list goes on.

There's so much of the world to see, I think it limits you.

Edit, posts crossed.
I see your doing it for different reasons than just holidays.
 
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We own a holiday home in Spain. Loads of research was done beforehand. We paid much more than €80K. Luckily we have no trouble in renting it out in the off seasons. Torrevieja isn't exactly Ballsbridge and you would have little problems buying at half your estimated price there.

On a more positive note, those seeking warmer climate from October to April would find Torrevieja handy because of its proximity to Alicante and Murcia airports. Rentals further south in the off season are about €600 per month for a 2 bedroom apartment in a good resort. If you can get around half that in Torrevieja you'd be doing OK. For the record most of our Irish neighbours in Spain first bought in or near Torrevieja before eventually relocating further south.

I'm probably painting a fairly dim picture for you and if there were odds in the Bookies I'd be betting against you coming out with any kind of longterm gain. But, often the heart rules the head. So, have a cold look at another thread on this forum "Buying a Holiday Home Abroad" where I went into more details of the perils of buying property in Spain.

Declan, I should add that property prices in coastal Spain are currently as near all-time-low as possible. The economy is recovering out there too, but not as fast as the recovery here. Before you show me the two fingers I would advise you rent for about 4/5 weeks in the off season. You will find out then if buying in Spain is for you and prices won't jump. Brexit issues are kicking in too in Spain and the Brits are watching carefully. The real estate agents will inform you the Russians/Poles/Swedes/Belgians are filling the market where once the Brits were supreme. But, would you believe an estate agent?
 
Thanks Leper. A friend already has a property in Torrevieja and is planning early retirement to there, so part of the attraction will be a close friend as a neighbour. I'm not overly fussed about it L.T. as an investment really, it really is a place to live in the sun with near access to Alicante to teach there. I've been a few times and know it's not the most celubrious area, but thay doesn't overly phase me. I will certainly look at the thread you mention. where is it located? Thanks for the detailed reply - it is very informative.
 
Thanks LS400. I know the argument. My friend who has a place there makes it all the time! But the plan to live there changes it. I spend a lot of time in southern France as well, so being able to drive to France will be really useful, but it all depends on how it works out financially. I may in the end, decide to take a month or so there renting and see how that works out.
 
Either way I wish you luck and good warm times. You're not gambling with a lot of money and you seem to know what you want. Go for it and keep us up to date with life there if you go for it.
 
Hi guys, update on this. I spoke with the bank. No problemo with borrowing around 50-60 K at a 5yr fixed rate mortgage of 3.25% against my existing home which has the huge sum of 7k owing on de tracker mortgage. They didn't give me the entire calculations, and I have followed up on that with them, so that I can see how borrowing will compare with simply selling shares and paying the CGT up-front to fund this. But it looks like a runner. I will apply and have loan approval. Not sure if its worth shopping around tho? The sums involved are small enough.
 
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You're not going to do much better than that if you decide to borrow. To get a secured loan rate elsewhere would involve repaying the Mortgage, or switching with an equity release. You'd lose the tracker rate on the 7k, and incur legal fees.

The only other option is a Spanish bank, but unless you become resident I understand the process is a bit cumbersome. You'd incur upfront charges, but the rate should be lower.

Personally, I'd sell the shares and buy with cash. I understand the CGT angle, but the only way to avoid it is if you die or the shares lose value. The way I look at it, you're borrowing to keep the shares.
 
Thanks Redonion. I will seriously look at that option, and you are making good sense. I hadn't really given that option any substantive thought until someone mentioned it here. The way I was looking at it was balking at the upfront costs of the CGT, but it may well work out that those costs are less than the interest over the loan period. I've done a rough calculation on the interest (assuming it remainss roughly same rate) so I have a benchmark to work on. I really appreciate all the comments and good advice.
 
Has anyone any recommendations on a solicitor (abogodos?) to use in Spain for a property transaction, and what is the going rate for this service?
 
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