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Strong US Dollar Vs. Weak Euro Creates Unique Investing Opportunities For Americans To Snap Up Spanish Property

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Author: Spanish lawyer Raymundo Larrain Nesbit Raymundo Larraín Nesbitt

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Geopolitical tensions, Europe’s energy crisis, and surging inflation are roiling the foreign exchange markets, creating extraordinary buying opportunities in Spain for house-hunters holding US dollars, argues Marbella-based lawyer Raymundo Larraín Nesbitt.

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By Raymundo Larraín Nesbitt

Director of Larraín Nesbitt Abogados

The ECB’s erratic and lacklustre monetary policy, always lagging behind the resolute path set by the US, translates into a weak euro. The Fed has no qualms to firmly hike the price of money to stave off inflation – unlike in Europe. As a result, the US dollar has hit an all-time high against the euro, even reaching parity multiple times.

In plain English, Spanish (European) property has now become dirty cheap for US investors. Savvy investors have picked up on this, and the smart money is flowing in to invest in large cities and sought-after areas, buying second homes.

Not least, is the fact that Spain is living a sweet property boom over the last two years, with resales appreciating 8.5% and offplan by 10% YOY. This is the cherry on top that sweetens the deal.

Did I mention that US nationals can benefit from a coveted Golden Visa on investing in Spanish property, allowing them unfettered access to a country in the Schengen Area, bypassing the pesky 90-180-day rule?

Bottom line, for our US cousins buying Spanish (European) property now is a win-win

At Larrain Nesbitt Abogados we have over 19 years’ experience buying, selling, and renting properties. We are also specialized in taxation, immigration & residency visas. You can contact us by email at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88, or by completing our contact form to book an appointment. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain. You can review here our client’s testimonials.

Larraín Nesbitt Abogados, small on fees, BIG on service.

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. No social-communist politician was harmed on writing this blog post. VOV.

2.022 © Raymundo Larraín Nesbitt. All Rights Reserved. Plagiarism will be criminally prosecuted.

* This article has been written by a third party not owned or controlled by Spanish Property Insight (SPI).

SPI disclaims any responsibility or liability related to your access to or use of any third party content.

Buying

What's The Maximum Age For A Mortgage In Spain?

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As we stay active longer, we’re also retiring later in life. In many cases, people continue to work well into their 70s, but how does this affect the maximum age for a mortgage in Spain? Can you still take out a home loan once you’re 65 and, if so, how long will its term last?

We tend to associate mortgages with a younger demographic, those starting on the property ladder in their 30s and early 40s. However, home loans are by no means their exclusive territory and, increasingly, it’s the over 50s who are looking at mortgages.

“The reasons are multiple,” says Katherine Walkerdine, a founding partner at Mortgage Direct. “They might be upsizing, buying a second home or investing in property and need a loan to finance part of their purchase.”

As a result, the maximum age for a mortgage in Spain has become a hot topic and we’ve had a flurry of enquiries from buyers looking for an answer.

Is there a maximum age by law?

The first point to bear in mind is that Spanish legislation does not fix the maximum age to take out a mortgage. In practice, however, most banks will limit the age a borrower can reach by the end of the term and it’s generally 70 or 75. 

We do have options for older applicants, where the age limit by the end of the term is age 80 and the term can be as low as 5 years. Clearly, pension income will be important for such applications. 

What does this mean in terms of repayments?

As a general rule, the older you are, the shorter the term and the higher the monthly repayments. The repayments for a 10-year loan taken out by a 65-year-old are therefore more expensive than those for a 20-year loan, for a 55-year-old. 

Is the maximum age for a mortgage in Spain different for non-residents?

For Spanish fiscal residents, 30-year loans until you’re 80 are possible, although rare. For non-residents, the usual conditions are a 20-year term until you’re 75, although 30 years is possible under certain circumstances. 

What about income requirements?

The official retirement age in Spain is 67; consequently, banks assume their clients will retire at this age even if they say they intend to work for longer. If you’re looking for a mortgage where the term takes you past age 67, you’ll need to meet the bank’s affordability criteria taking into account both your employed or self-employed income (if you’re still working) and, more importantly, the anticipated retirement income from age 67 if you were to retire. You will need to provide proof of retirement income in the form of a pension or similar. The proof assures the bank that an applicant has the means to continue making mortgage repayments when they stop working.

What are the affordability requirements for older mortgage applicants?

Again, criteria vary depending on the bank, but usually the financial entity will apply the same one-third requirement to a pensioner as it does for an employed or self-employed applicant. In practice, this means that the total of your existing debts, significant expenses (rent and alimony, for example) and new repayment on the Spanish mortgage added together must not exceed more than one-third of your net monthly pension.

Are there any additional requirements?

In some cases, banks ask older mortgage applicants for extra guarantees. They may require mortgage guarantors, which are not always easy to provide. However, we’d reiterate that these requirements vary from bank to bank and not all providers request them.

Final thoughts

In conclusion, we’d highlight that, in general terms, a 65-year-old won’t get a mortgage for longer than 10 years and may face additional qualifying requirements. However, as is always the case with mortgages, each application is different and ultimately depends on your mortgage broker securing the best deal for your circumstances.

Don’t hesitate to get in touch if you want to discuss your mortgage needs in Spain.

* This article has been written by a third party not owned or controlled by Spanish Property Insight (SPI).

SPI disclaims any responsibility or liability related to your access to or use of any third party content.

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Buying

Is It Possible To Buy Or Sell Spanish Property From The UK And In Pounds?

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You might be under the impression that you can only buy Spanish property in Spain and euros. But as we explain in this article, it’s perfectly possible to carry out the transaction in the UK, in pounds and using a lawyer based in the UK.

Sometimes for practical reasons or personal circumstances, it may not suit you to buy or sell property in Spain or pay or receive the price in euros. In this case, buying or selling in the UK with the financial translation in pounds may be the answer.

Advantages of using a UK-based lawyer to buy or sell Spanish property

As well as your situation, a UK-based lawyer for the transaction also has the following benefits:

An absolute understanding of all documents

As well as a major investment, a property purchase can be a complex process that may be accentuated by language barriers. If you’re not fluent in Spanish, the chances are that you’ll overlook a detail or misinterpret an explanation.

If you use a UK-based lawyer experienced in Spanish property law, you can rest assured that all the legal aspects of your investments will be explained to you. You’ll also get accurate translations of all documents. As a result, you will know exactly what you’re signing.

Buying or selling a property in Spain impacts your tax and residency situations. A UK-based lawyer versed in conveyancing in Spain will be conversant, if not an expert, in these matters and offer you advice to take action in your best interests. In addition, the lawyer will advise you on will and inheritance issues to ensure your assets are safeguarded.

Substantial indemnity insurance cover

Under UK regulations, lawyers operating in the country must have minimum professional indemnity insurance cover. This insurance is highly regulated and runs to several million pounds. While Spain also requires indemnity insurance cover, it may not be as high and if your Spanish lawyer is negligent, you could stand to lose money. It is paramount to check your lawyer’s insurance cover in the client care letter.

Buy or sell in pounds

Exchange rate fluctuations can easily wipe thousands off a transaction, particularly if you haven’t secured a fixed rate ahead of the purchase or sale. You can futureproof this possibility by using a UK-based lawyer and buying or selling in pounds. That way, you know exactly how much you’re paying or receiving and don’t have to worry about adverse exchange rates.

What you need to know about buying or selling Spanish property in the UK

As seen above, there are several advantages to using a UK-based lawyer for the transaction. “However, there are some caveats to this possibility,” says Julio Prieto at Del Canto Chambers. “It’s imperative that buyers and sellers be aware of them from the start of proceedings”.

Remember that Spanish conveyancing regulations apply

If it suits you better to buy or sell your Spanish property from the UK, you first need to know that the process will take place according to Spanish conveyancing rules and regulations. They apply because the property is physically in Spain.

Spanish law stands in place throughout the process from the private contract to the transfer of title and registration in the appropriate Land Registry. “Don’t expect UK conveyancing protocols,” cautions Del Canto’s lawyer, “and be prepared for a totally new process if you’re not familiar with how buying and selling work in Spain.”

Ensure your lawyer is qualified in Spain

As well as the transaction taking place as per Spanish regulations, your lawyer must be qualified in Spain. Make sure your chosen professional has extensive experience in the Spanish property market as well as a sound understanding of the tax system and other implications of buying a home in Spain.

Check your lawyer has indemnity insurance cover

As mentioned above, the UK requires lawyers to take out this insurance, but it’s worth checking to make sure. While you’re asking, enquire about their knowledge of Spanish and UK tax and residency rules too.

At Del Canto Chambers, we offer comprehensive conveyancing services if you’re buying or selling property in Spain. We have offices in London as well as several towns and cities across Spain.

* This article has been written by a third party not owned or controlled by Spanish Property Insight (SPI).

SPI disclaims any responsibility or liability related to your access to or use of any third party content.

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