Besides existing construction, you can choose to invest in a new-build home in Spain. With this purchase, financing is very different! We will explain a few things about this:
In case you want to buy a newly built flat in the Netherlands, the builder is in fact paid by the bank from a construction deposit. This is not the case in Spain! The reason is that experience shows that many contractors have gone bankrupt or the properties are not registered correctly in the Spanish land register.
That is why in Spain it works in a different way, they only finance the property when it has the proper permits such as a Cedula (residential licence). The mortgage is granted the moment the property is completed with the proper permits and properly registered in the Spanish land register.
This is the reason why therefore the first 30% of the purchase price is paid from equity to the contractor. Once the property can be completed, the mortgage will be granted and you will pay the remaining 70% (you will pay this out of the mortgage, as at this point the mortgage can also be granted).
Having a Spanish home built
Another situation is when you have the ambition to start supervising construction yourself. In this situation, the land is always paid for from your own resources first, you will not get financing from the bank for this beforehand. You engage a recognised construction company, with a proven history of success.
Note: always discuss your choice in contractor with the bank. This contractor will have to prepare complete construction drawings and a quotation to submit to the bank. Make sure the building permits are also in order so that you do not face any nasty surprises regarding financing during the construction process.
Continuing, you can borrow about 60% of the cost of the land plus the construction cost. Again, proper preparation for this funding is key. The advice is therefore to talk to one of our advisers in this field!
Rebuilding a Spanish home
The Spanish home you have your eye on is not quite built the way you want it to be. You would like to make a terrace or build a swimming pool, for example. Therefore, you would like to know if any remodelling can also be co-financed. That is possible. But beware:
In fact, this is not the normal practice! Financing a renovation is possible if it meets the following two points: renovation must be done by a recognised construction company and the renovation costs must be reflected in the appraisal value.. If, for example, €30,000 is rebuilt, this should also be reflected in an increase in the assessed value.
Proper permits such as a Cedula (residential licence), Licensia Obra Nueva (licenses for building) and official quotations from approved contractors must also be submitted. So there is quite a lot involved if you want to get financing for this!
Curious about your financing options for new construction?
If so, please contact us first to discuss your specific request. It is vital that you prepare the financing of a new-build home properly. For example, get a mortgage report first, to see how much financing you qualify for. Or engage legal help through us so that permits and documents are checked in time, as are the builder and valuation.
Keep in mind that a mortgage is also based on the collateral . In the situations above, the mortgage is always granted only when the proper (residential) permits are in place. The moment everything is in legal order with the property, the mortgage can only be granted.