How Can You Buy a Spanish Property on Credit?

17th October 2023
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Under what conditions can a Spanish property be bought on credit? Can a Hungarian citizen get a loan in Spain? These and similar questions arise when our clients want to buy real estate.

Recently, more and more people are buying property in and around Marbella. Some continue to expand their investments in the international real estate market, but others are looking for a second home. Marbella and its surroundings are particularly popular with both investors and expatriates. The conditions for taking out a mortgage loan are constantly changing. The offices acted according to different rules a few years ago, and the set of conditions is different recently. Among the European Union countries, inflation in Hungary is particularly high, so the forint is not considered a stable means of payment in the eyes of Spanish financial institutions. In the following article, we have collected the most important rules and information about taking out mortgage loans in Spain - valid at the end of 2023.

In October 2022, there was also a period when inflation in Hungary was over 24%, while inflation in Spain was half the EU average. Even in October 2023, the numbers in the Mediterranean country are much more promising. This is one of the main reasons why Spanish banks have changed the conditions for obtaining a loan if the applicant comes from a country where the official currency is not stable. This is the case, for example, with the Hungarian forint from the point of view of Spanish banks. What if we try in the mother country for the first time and ask our Hungarian bank back home whether they will give us a loan for buying property abroad?

DO HUNGARIAN BANKS GIVE MORTGAGE LOANS FOR THE PURCHASE OF SPANISH PROPERTY?
It is practically impossible to register a Spanish real estate mortgage in Hungary, since there is no bank in Hungary that provides this possibility.

It is promising news that CaixaBank and Global Payments Inc., a provider of global payment technology services, founded a joint venture with Central and Eastern European financial services provider Erste Group Bank to expand in the Czech Republic, Slovakia and Romania, but Hungary was not included in this service package. into it, as the euro has not yet been introduced in Hungary.

The original press release published on June 1, 2023 can be read at this link.

DO HUNGARIAN BANKS GIVE MORTGAGE LOANS SECURED BY HUNGARIAN REAL ESTATE?


If you intend to apply for a mortgage loan from Hungarian financial institutions, the primary requirement is that you have a Hungarian property that you can use as collateral in case of sale (e.g. in the case of your own apartment). However, the property will be sold if you are unable to repay the loan. This path is already possible, you can already buy in Spain with a free-use loan. Finally, the third way is for a Hungarian citizen to submit a loan application to a Spanish bank. It is important to point out that it is only possible to take out a loan for Spanish real estate at the time of purchase, no bank will give a loan afterwards, and later it is not possible to "load" a loan on the existing Spanish real estate at all.

CAN A HUNGARIAN CITIZEN GET A MORTGAGE LOAN FROM A FOREIGN BANK FOR A FOREIGN PROPERTY?


Yes, but some basic requirements must be met. Previously, all EU citizens were treated equally when applying for a loan to Spanish banks. At the beginning of 2022, when the forint-euro exchange rate crossed the HUF 400 mark, European banks, including Spanish financial institutions, rejected all loan applications where the applicant's regular income is generated in a country where the official currency is not the euro. This change surprised us as a real estate agency, as we had purchases in progress and the buyers paid a 10% deposit, believing that the Spanish bank would disburse the loan within a few months. Unfortunately, it didn't happen that way, they were forced to buy the properties without a bank loan.

In September 2023, some banks introduced new regulations. In the following, we present the rules according to which non-Spanish residents can take out a loan.

HOW CAN A NON-SPANISH RESIDENT GET A MORTGAGE TO PURCHASE A SPANISH PROPERTY?


We received the following detailed information from the regional directorate of Santander bank:

A) Preferred countries: Great Britain, Ireland, Germany, France, Austria, Netherlands, Belgium, Switzerland, Italy, Portugal, Poland, Norway, Sweden, Denmark, USA and Canada.

Apartments over 300,000 euros: maximum term 20 years and no more than 65% of the value of the property. The installment cannot be more than 30% of the regular monthly income. (A monthly net income of €3,000 must be verified in the case of a €1,000 installment)

B) Non-preferred beneficiary: in the case of purchases over €300,000, the maximum term is 20 years and a maximum of 50% financing of the property's estimated value.

Basic requirement: the client's income must be in one of the following currencies: EUR, USD, GBP (pound), CHF (Swiss franc), SEK (Swedish krona), NOK (Norwegian krona), DKK (Danish krona), CAD (Canadian dollar ), PLN (Polish zloty). For the purchase of Spanish and Portuguese real estate, a loan brokerage company sends offers from several financial institutions after we complete a free loan pre-qualification by clicking on the following link: LOAN PRE-QUALIFICATION (free and without obligation!)







WHAT RULES APPLY TO HUNGARIANS WHOSE REGULAR MONTHLY INCOME IS IN HUF?



A Hungarian citizen has not been able to get a loan from a Spanish financial institution in the last two years. We asked the head of the lending department of La Caixa bank for an appointment to find out under what conditions those who receive their income in forints can get a loan.

The applicant must fill out a form, on the basis of which the bank prepares a free pre-qualification. In this phase, it is not necessary to attach documents, it is sufficient to enter the real data in the form. The conditions are:

for purchases over 300,000 euros, a maximum term of 15 years and financing of a maximum of 50% of the estimated value of the property. The installment cannot be more than 20% of the regular monthly income, which means that if the monthly installment is €1,000, the applicant must have a net income of €5,000/month.

It is also important to take into account that the loan applicant cannot be older than 60, as he will be 75 at the end of the 15-year term, which is the acceptable upper age limit for banks.

WHAT INTEREST CAN YOU GET A LOAN AT THE END OF 2023?


Spanish banks usually give loans with variable interest rates between 3.5% and 5.5%. You can choose the fixed, variable and combined versions, which are simulated by the loan officer. In the example below, we asked for a loan of €200,000 with a term of 15 years, since according to the bank's information, it is not possible to apply for a loan for a longer period in the case of a Hungarian loan applicant. Since according to the new regulations, the repayment installment can be a maximum of 20% of the monthly income, the loan of €200,000 in the example will only be granted to those who have a certified net salary of €8,000 per month.

In summary, it can be said that although the forint is not considered a stable currency by Spanish financial institutions, it is possible to get a loan for Hungarian citizens as well. Although the applicant must have the other half of the value of the property for a term of 15 years, and the monthly repayment can be a maximum of 20% of the regular monthly income. A significant proportion of real estate sales in Marbella and its surroundings take place without a loan. There is a demand market and strong purchasing power, narrowing supply and, as a result, rising prices characterize the market at the end of 2023.


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