Whether you buy a property with your own funds or with a mortgage is not always an easy decision. If you have the funds to buy the house, it does not always make sense to tie up your capital. Many clients today consider a mortgage to make the most of the interest rates, the tax benefits and to maintain liquidity.
The Euribor, the main indicator for calculating mortgage interest rates in Spain, has been low for various years. Mortgage interest rates in Spain many times are lower than those applied in other countries, which undoubtedly favors buyers who have taken out mortgages over those who buy their home in cash.
In fact, many clients have their funds well invested obtaining higher returns, it therefore makes it very attractive for all buyers to mortgage.
When you purchase a property in Spain, you should be aware that there are tax implications, especially for properties of a certain threshold, were in most cases you will have to pay wealth tax each year. In some areas of Spain wealth tax is more than double the European average!
Mortgages can allow you to reduce both the wealth tax and the inheritance tax, as they are considered a debt and reduce the taxpayer's net worth. Therefore, obtaining a mortgage for the purchase of a property in Spain has positive repercussions from a tax point of view.
see wealth tax deductions
It makes sense to maintain liquidity and not tie up your money in one asset, investing your funds in other areas that generate higher returns. Experts recommend diversifying across different investments to mitigate your portfolio risk.
Mortgaging at the time of purchase will help you diversify your portfolio and maintain liquidity to invest in other types of assets. In Spain it is difficult to release equity and obtain a mortgage after you have purchased. Consequently, it is important to take this into account and mortgage at the time of purchase.
A mortgage broker in Spain will be able to help you obtain the very best mortgage out of all the banks. Obtaining a mortgage in Spain can be very different to obtaining a mortgage in other countries and the process is often complex. A good mortgage broker knows which banks are offering the best deals at all times and will take care of the application-process whilst ensuring you secure the very best deal.
It is important you use the services of a mortgage broker who has an excellent knowledge of the local market, has extensive experience in the financial industry and can negotiate with the Spanish institutions. The Lionsgate Capital team have vast experience helping hundreds of clients obtain the best mortgage and will be able to help you find the option that best suits your needs for your Spanish property purchase.
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You are one step away from obtaining key information on how to optimize your property purchase in Spain with a mortgage. Arrange an appointment to find out how we can help you. We are your mortgage brokers.
