How does the purchase and financing of new building in Spain?
You would like to buy a property in Spain, but you have also settled on new building dropped. Understandable! But the buying process and financing does differ from a regular purchase. Pedro is happy to take you through this buying journey!
In addition to existing construction, you can choose to invest in a newly built house in Spain. Because financing is different for this type of purchase, Pedro is happy to explain what to look out for!
How does financing Spanish new builds work?
If you want to buy a new-build flat in the Netherlands, the builder will be taken out of a building depot paid. This is not the case in Spain! This is because experience in Spain 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 important for you as a buyer, because the financing will not be arranged in advance and the mortgage application process will only be initiated towards completion!
Equity investment in new construction
So it will often happen that you pay part of the purchase price (the down payment) out of equity to the property developer or builder/contractor. This may be 20%, 30% or even as high as 50%. Once the property can be delivered, you submit the mortgage application and the mortgage can be provided. With this, you pay the balance of the purchase of your new-build home up to 70% of the assessed value on completion!
You can finance up to a maximum of 70% in Spain. Therefore, if more than 30% down payment is required, you will have to advance that extra until the mortgage can be issued.
Having a Spanish home built
Another situation is when you have the ambition to supervise 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. If you want to finance (part of) it through and mortgage, the bank will ask for a recognized construction company engage, with a proven history of success.
Note: Always discuss your choice of contractor with the bank. This contractor will have to prepare complete construction drawings and an offer to submit to the bank. Make sure the building permits are also in order, so you won't face any nasty surprises regarding financing during the building process.
Only at the end on completion (again, on delivering Cedula) can you borrow about 60% of the cost of the land plus the construction cost. Again, proper preparation for this financing is vital. So always get advice on whether discuss your case with Pedro!
It makes sense to do a mortgage calculation before your purchase, so that you know whether you can get a sufficient mortgage upon completion. It will also give you tips on how to demonstrate good figures upon completion!
Building a Spanish home
The Spanish property you have your eye on is not quite built the way you would like it to be. You would like to make a terrace or build a swimming pool, for example. That is why you would like to know whether a possible renovation can be co-financed. This is possible under certain conditions, but be careful:
This is not normal practice in Spain! Financing a renovation is possible if it meets the following two points:
- Remodelling should be carried out by a recognised construction company
- Remodelling costs should be reflected in the assessed value
If, for example, you rebuild for €30,000, this should also be reflected in an increase in the appraisal value. Of course, you can discuss this with your appraiser.
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 this is quite a process in Spain.
Curious about your financing options for your Spanish new build?
There are several possible routes. Pedro may be able to get you started on that. For example, you may be able to withdraw your surplus value in the Netherlands or Belgium. For that you can use our Home equity check use. Or finance it in Spain itself with a Spanish bank! Pedro is happy to make a mortgage calculation for you. If so, please contact Pedro first to present your issue.
Legal check on your collateral
Keep in mind that a mortgage is also based on the collateral. In the above situations, 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.
Pedro's tip is therefore to engage legal help, such as a conveyance lawyer, who will check the permits and documents in time, as well as the builder and valuation.
Already a preliminary mortgage calculation get it done?
Through holapedro, you can perform a customised calculation via AI to find out your maximum financing. We test you on all possible variables and you will receive a sophisticated mortgage simulation. This way, you will know your mortgage options in Spain within 20 minutes!
Or rather first ?
How much can I borrow for a new-build home?
Want to know more about buying in Spain?
What is the maximum mortgage financing in Spain?
How much is your maximum financing for a purchase in Spain. You can read here how the amount of financing in Spain through banks is established and how to calculate it yourself!
