Before looking at Javea properties, it’s a good idea to establish exactly how much money you have to spend and how you will finance the purchase.
There are several ways to finance buying a property in Javea.
If you have the actual cash this is obviously ideal, as not only does it mean less paperwork, but it also puts you in a strong bargaining position to get a good deal on your desired property.
If your available cash is in a currency other than the euro, you will need to be cautious regarding exchange rates. improving the rate you are able to obtain on a large sum could possibly save you thousands of euros.
Instead of relying on your UK bank to manage the exchange, it’s optimal to use a dedicated currency exchange company.
Forex companies commonly have a much more favourable exchange rate, and many offer the possibility of locking into a fixed exchange rate many months in advance, so you know exactly how many euros you’ll receive for your local currency.
Most buyers are not in the lucky position to be able to finance a Javea property purchase outright in hard cash.
If this applies to you, you will need to raise the remaining money in other ways.
There are several ways you can obtain the cash for your new home.
Perhaps the most popular way to raise funds by removing your principal residence in your home country; this is usually the fastest way to raise cash and a straightforward process.
If like many buyers on the Costa Blanca you are around a retirement age, you probably have enough equity in your main residence to release a significant amount.
As well as being a straightforward way of getting the necessary cash, you escape the risk of currency fluctuations because your repayments will remain the same regardless of what happens with any possible instability is between your local currency and the euro.
The only variable you will have to worry about is the interest-rate attached to the loan.
Another option is to speak with the bank in your home country and apply for an overseas mortgage.
This is a popular choice as again you avoid risks associated with currency fluctuations.
Furthermore, it’s far easier to deal with a bank in your home country that speaks your language.
Possible drawbacks with this option are that the interest rates and associated fees will be quite a bit higher than if you were applying for a mortgage in your home country
The last option we will discuss is applying for a mortgage in Spain where are interest rates are among the lowest in Europe.
In Spain, loan to value proportions are now higher than in many countries, meaning you must pay down a higher deposit.
Initial mortgage acquisition fees can also be higher.
Since the property market crash of 2008, Spanish Banks have become much more stringent when it comes to granting mortgages and they will want to see a whole array of paperwork and proof that you are able to afford the repayments.
The usual way of contracting mortgages for non-residents is usually through the internet, based on phone calls with the entity.
The vast majority of banks offer a section on their website offering a contact channel for this type of customers.
What are the repayment terms?
As for the repayment term, referring to non-residents, the maximum is usually 20 years, being higher in the case of residents in the Spanish territory (the maximum is usually 30 years).
What is the maximum financing?
The usual maximum level of financing is usually 80% of the purchase price or appraisal value; reduced to 60% in the case of a second home.
In addition, the mortgage fee, added to the instalments of other loans should not exceed 40% of the income.
Note: If you have plans to rent out your new home, this will be advantageous when it comes to obtaining a mortgage in Spain.
This is a very basic guide to your options of financing a property purchase.
We advise you speak to a financial advisor to give you the best advice for your individual circumstances.
In the event you decide on a Spanish mortgage, we can connect you with reliable mortgage brokers in Javea, so do contact us if you would like help in this matter.