Your surplus value betting on a purchase in Spain or Portugal

Pedro regularly discusses the case of whether surplus value can also be used for a purchase in Spain or Portugal. Through answering the questions below and try to give you an insight into this.

Buying a house in Spain or Portugal with surplus value from your existing home?

These days, it is almost more the rule than the exception: a substantial surplus value on your home in the Netherlands or Belgium. Very nice of course, but you may not want to move at all. And would rather buy a second home! And since both Spain and Portugal are attractive countries to live in, that's a good option for a 2nd home (or investment).

But how do you put the surplus value to use for your home purchase in Spain or Portugal? And what should you pay attention to? And how does this work together with a mortgage application? We list it for you:

What exactly is surplus value?

Generally, you hear a lot that there is excess value on a property. But when is this really the case? The tax authorities use the following interpretation: Surplus value = selling price minus the owner-occupied home debt (mortgage) and the selling costs of the home. So in this traditional way, you will have to sell your home first to know what your surplus value is!

Banks or lenders in the Netherlands look at the WOZ value, or even better, an official appraisal, to see what the current market value of your home is. Of course, the residual debt from your mortgage still needs to be deducted from this + any costs. This difference is your surplus value.

The banks then calculate using the current market value, the loan-to-value ratio. This is the percentage of your mortgage debt to the market value of your home. Almost all lenders in the Netherlands or Belgium want to give you insight into this data. With this data, we can start calculating!

The best way is to discuss the excess value with an independent mortgage broker. The latter can get a valuation done and can sound out several lenders for a withdrawal.

Determining final surplus value

Through an appraisal report, you can ask your bank to use your excess value. This can be done by increasing your current mortgage (higher registration) or by taking out a second mortgage on your house. You determine this together with the bank or an independent mortgage adviser.

However, the bank may want to lend less than the "current" value. This has to do with a risk policy. In addition, they also want to see that your income is sufficient to bear the higher mortgage.

And finally, they will often ask what is the purpose of your excess value, or the higher loan. And that is often where the catch is.

Can you use excess value from your home for a property purchase in Spain or Portugal?

Dutch banks like to see you deploy surplus value in a stable investment. This is because they want the idea that you don't just spend your money and get it back. So using your surplus value consumptively will often not be accepted.

However, they do see investing in a home as a good goal. But abroad, most Dutch banks are still reluctant to do so. Just as they do not want to finance homes in Spain, they often will not readily accept surplus value for a home abroad. The risk is often higher for the bank.

Mortgage refinance to release surplus value

One way to get around this is to transfer your mortgage, i.e. take out the mortgage loan from another bank. At holapedro, we have good partners in the network who can help you with this. Feel free to ask Pedro about the possibilities.

The advantage of this method is that the proposed lenders are open to investing abroad. Very convenient!

Taking out a 2nd mortgage on your surplus value

You may have good terms on your existing mortgage, such as a low interest rate. In that case, it is a waste to transfer it. In that case, a supplementary mortgage is an option. Together with an adviser, you look at a 2nd mortgage on the surplus value of your home.

Note that your surplus value financing depends heavily on the economic market situation and your financial purchasing power. So don't assume it's just possible and consult with a financial adviser.

How does the process of withdrawing surplus value work?

Withdrawing your surplus value will be gradual. Through Pedro's affiliated advisers, it runs as follows:

• First, there will be a check (on both the property and income)
• A conversation will then take place for conditions and requirements
• Consideration will be given to which lenders will accept your foreign purchase
• Then a comparison of different lenders (or own bank) will be made
• After a choice is made, the mortgage is paid off or transferred and your surplus value is released

How long does the mortgage switching process take?

On average, this process takes a month. If all documents are ready and bank responds quickly, it can possibly be arranged within 2 to 3 weeks.

This process is also applicable to entrepreneurs, but bear in mind a longer lead time and that you need to provide more documentation.

Tip: Want to combine this with a mortgage application in Spain or Portugal? This easily takes 8-10 weeks, so you can combine this process if necessary. Just make sure you have the full calculation done, so you don't get stuck with your mortgage application in Spain or Portugal!

Using surplus value when buying Spanish or Portuguese property

If the bank where you obtain the excess value agrees to invest in Spanish property, then you can use this excess value.

If you have a good amount of money (+ any savings), you may be able to buy the property out of cash.

A more common way is to finance a part with a mortgage in Spain or Portugal. In fact, it is common to be allowed to finance only 70% to 80% of the property. In addition, there are often 6-15% buyer's costs that you have to bring in yourself. So in total, you will soon need 30-45% from equity. You can of course use your excess value for this.

Do bear in mind any requirements that the Spanish or Portuguese bank may then impose:

Requirements of Spanish or Portuguese banks to deploy surplus value

A bank in Spain or Portugal issuing a mortgage for your home will be keen to see you put in savings. They are not keen on financing from "borrowed" money. So they do see your surplus value as borrowed money. This is because when you withdraw surplus value, your fixed expenses also go up. And as a result, your financial room for a mortgage in Spain or Portugal could be compromised.

Still, banks often think along. If you can prove that you also have savings, banks may accept 50 to 70% of your own contribution from excess value. So keep this in mind, that in addition to your excess value, you are also saving for your purchase! Again, don't just assume that banks will be accommodating!

Tip: Before you simply opt for excess value or a mortgage in Spain or Portugal, you will need to know what the smartest purchase route is. Consult with a financial adviser about your options. Or ask Pedro for assistance!

Your calculate surplus value For a home purchase in Spain or Portugal?

Then do our surplus value check and order your report. Our check will give you an insight into your options within 1 working day and Pedro will put you in touch with a financial adviser. Calculate it today with Pedro:

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Or rather first consult with Pedro?

Can I deploy my surplus value in Spain?