Buying off plan and raising finance
As the Spanish property market has recovered more and more buyers are looking at off plan purchases which can provide good value for money.
What is the lending process
Issues surrounding finance of this type of purchase do however mean that unless you have the cash to to complete when the deed is ready to be signed or know you can access that cash by other means banking on getting a Spanish loan is a risky business. You cannot secure the loan at outset so after you have paid over staged payments which you would use if you could not complete.
Why is it a risk
No Bank in Spain can offer a guaranteed loan that will last until the property is built. Unless the property is only a few months way from completion so 3 or 4 months this means you will have parted with staged payments with no guarantee that when you need it a loan will be forthcoming.
During the build phase things can and do change so lenders may change their criteria, loan to value they can offer or in worst case scenario be able to lend at all as happened in the 2007/8 banking crisis.
Buying off plan should be approached with caution as the risk can be high if you need a mortgage in Spain and advice should be taken before making a commitment.
Read the full article:- Off plan purchases mortgage risk in Spain
