It is true that the majority of property purchases on the Iberian Peninsula made by our compatriots are cash transactions, but it is also worth taking a look at the credit conditions. As in the case of property prices, they also tend to be more attractive than in Poland.
Property on credit in Spain?
In Spain, interest rates on mortgages are often lower than in Poland. This is partly a result of the monetary policy of the European Central Bank (ECB), which sets interest rates for eurozone countries. In recent years, they have even been at record lows, which has reduced the cost of mortgages. In Poland, due to high inflation, interest rates remain higher, which translates into higher mortgage costs.
Thus, the purchase of real estate in Poland based on credit tends to be more expensive and requires a much better creditworthiness than just a few years ago. Currently, according to the European Central Bank, Poland stands out as having the highest average mortgage interest rate compared to Europe. What does this mean? The average interest rate of 7.83 per cent places our country at the top of the list, alongside Hungary and Romania.
According to the ECB, the average interest rate on loans in Spain is 4.21 per cent. Analysts say that this year we can expect a reduction in the maximum interest rate there to 2.5 per cent. Thus, loan instalments should be lower and the possibility of buying property based on this source of financing should be even greater. The question of tax settlement in the case of buying a flat in Spain is also of considerable importance.
Credit in Spain for non-residents
Buying a house or flat on the Iberian Peninsula can be an investment of savings and a geographical diversification of wealth. Investors treat such a transaction as a safe investment of capital, but there is also no shortage of people who decide to move and use a flat or house on the Costa del Sol for everyday use. Our compatriots, who buy property in Spain, take advantage of the good economic situation on the Polish market, reinvesting the funds obtained in real estate on the Iberian Peninsula.
When buying property in Spain, our compatriots are much more likely to use funds accumulated in cash rather than supporting themselves with credit. Up to 90% of purchases of houses and flats on the Iberian Peninsula are made without bank financing. However, it is worth knowing that in the case of Spain, the path to obtaining a loan is similar to that of Poland. In the case of non-resident clients who have documents to authenticate their income, Spanish banks grant loans without major problems.
The maximum loan term is 20 years, which also depends on the age of the borrower. The loan terms currently offered by the banks (analysis based on the current offer from Banco Santander and Banco Sabadell) are as follows:
- 50-60% of the valuation of the property,
- 20 years – loan repayment period,
- 3.60% interest rate in the first year of the loan,
- Euribor +1.9% interest rate from the second year of repayment (non-eurozone customers are offered variable rate loans from the second year of repayment),
- 1% to 1.5% mortgage opening commission,
- 0.25% in the first 3 years (0% thereafter) commission for early partial or full repayment.
