Mortgage for Spanish property, opinions please

Wasabi74

Hello,

We want to buy a property in Spain and after speaking with Abbey/ Santander (where we have our mortgage on our UK home) they said that we can apply for their Spanish mortgage deal for 80% of the amount. We are planning on letting the property as a holiday let for most of the time, but as we don't have any savings we need to work out a way to raise the £25,000 we will need for the deposit.

I guess my questions are:
1. How would it be the best way to go on about this? Personal loan or re-mortgaging our UK home? (pls note we have already re-mortgage in two occassions and we are running out of equity to do).

2. Are there any other UK banks that offer a 100% mortgage?

3. Should we just give up on the idea?

We have looked at the numbers and financially it does make a lot of sense when looking at what the mortgage payments would be vs the monthly rental income, but are we mad to consider the whole idea without having the money for the deposit?

Thanks a lot for your comments in advance
W

Conrad

Wasabi, I have quite a bit of personal experience investing abroad.
I can tell you most people do not make a good investment in Spain.

I'll give you a couple of examples of why they dont (there are many);

Season - at best you'll get 4 months rent

Polaris world experience - the rent does'nt even cover the maintenance / rubbish collection and managment fees, let alone make a profit and thats on a high spec much talked of development

With 100% funding in total there is no way you will do well on this.


Honestly it's not an 'investment', a wealth store maybe.

There are far better palces to invest. If you want merely a lifestyle property and not a high yield investment then Spain can be ok of course.

Also that Abbey 80% mortgage in Spain, in my experience they end up offering a lot less after having gone through all your outgoings properly (long into the deal).

VIGILANT22

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Wasabi74

Thanks Conrad, it makes sense. We are after a lifestyle property really, somewhere that covers the mortgage payments (maybe a bit more ideally), somewhere that over the years will increase its value while we also get to enjoy it ourselves.

Looking at buying in Ibiza; rental prices yield a v high profit and you have guaranteed occupancy at least 20 weeks each year.

What would you recommend as the best way to raise the money for the deposit btw?

Conrad

Well I think you've covered how you might raise the deposit - loan for example, so it's going to be your call on whether that's sensible and sustainable. There is no 'best way' as such.

I've got to say I'm very dubious Abbey will do 80%. I have found Spannish lending even to locals who are living and working there is usualy less than 80%.

wodgerdodger

Further to Conrads response although very few do you correctly should also pay tax on the rental income at the standard rate which I think is around 20% and you cant deduct the costs of purchase as you can in the UK nor management costs. Spain thrives on a black economy but they are really strugling now with almost 20 % unemployment and if they folow Greece'sexamplewill be forced to clampdown on many things.

We had a flat which we used quite regularly but let it out in peak periods and quite frankly the return we got was not fantastic.Each let cost us 15% managemnet fee plus around 120 euros cleaning/laundry etc. You then have wear and tear and breakages and dependent on who your tenats are could be hefty in Ibiza!!

If you are buying it as a home for yourself and furnishing it for your enjoyment then you will be in for some shocks when you get there after the letting period and see what needs to be replaced.

The buying costs alone will add around 15% to the price plus whatever deposit you may have to find. SoI would think long and hard is this the best way to tie up capital at the moment

VIGILANT22

If eventually for lifestyle have you considered Cyprus

de1amo

no one has mentioned the currency 'gambling' in all this--can make a huge difference when buying abroad at the rate you first fix into the country of choice--i bought a place in turkey 3 years ago and due to the weakness of the pound it has gained 15pc -but it can rapidly rebound-its a gamble!