HOW DO YOU FUND A HOLIDAY PROPERTY?

1.     CASH
2.     CASH WITH A MORTGAGE TOP-UP
3.     SPANISH MORTGAGE
4.     UK MORTGAGE
5.     “CROWD FUNDING”
These ideas may seem obvious but not everyone thinks of all the possibilities particularly if they hadn’t thought of the combination in point two or five.

CASH:

This is straight forward. You find a property you pay for it with money!! Remember that you do have to pay tax on your purchase, usually about 13% of the purchase price, in Spain. The other thing is to get a good rate of exchange when handing your cash over. If you know that you are definitely buying, it may be to your advantage to exchange when the rates are in your favour and put the money into a Spanish bank account which you will need to go ahead with your purchase. This is where currency houses can help you get the best rates.

CASH WITH A MORTGAGE TOP-UP :

This is either the means of buying a property or to upgrade your purchase to a property type that you wouldn’t otherwise consider. This involves paying for the majority of the purchase price in cash and having a small mortgage at a relatively small monthly payment.

 SPANISH MORTGAGE :

Yes, contrary to some reports you can still get a mortgage in Spain!! Usually this is up to 60% of the purchase price. This means that you do have to have a cash sum to put down as a deposit. Until recently 3 Spanish Banks offered 100-115% mortgages (subject to status) meaning that the purchase price plus taxes etc can be covered by the mortgage. Now there is just one which offers this (subject to status) but only on certain properties.

UK MORTGAGE OR RE-MORTGAGE:

For some people it may be simpler to raise money on their UK property especially if they are mortgage-free or only have a small mortgage.

“CROWD FUNDING” :

No we are not talking about high finance here!! Just people getting together and buying a property which individually they could not afford. This might be easy with family members but is still possible with friends. Obviously you would need to make sure through your lawyer/s the arrangements for buying the property, use of the property and selling on in the future. If parents, for example, intend to leave the property to family members in the future this is where you need the advice of a Spanish Lawyer as Inheritance Taxes etc are different in Spain from the UK.

REMEMBER TO CONSULT YOUR FINANCIAL ADVISER WHEN CONSIDERING ANY OF THE ABOVE WAYS OF BUYING.

Keith Pintointernational

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