Self-Build Mortgages in Spain

Encouraged by increased demand for Spanish property, Spanish lending institutions are now offering a variety of accessible funding schemes to property investors. Self-build mortgages are particularly contributing to the increase in new-builds along the Costa del Sol and are an excellent option for investors looking to design and build their own homes on the southern Spanish coastline.

A self-build mortgage is a home loan taken out on a property which you are building yourself. The difference between a self-build mortgage and standard residential mortgages is that the funds are allocated to the client at set stages throughout the construction process, rather than as one single lump sum. The scheme reduces the lender’s risk by ensuring that the funds are allocated and spent according to a pre-approved plan.

The payment structure and exactly when the funds are released will depend on the lender, but the instalments are generally allocated over three main stages; when you buy the land, when the foundations are being laid, and when the property is built up to eaves level. Final payments will usually be made when the roof is watertight and then when the interior walls are plastered.

The payment scheme not only reduces the risk of overspending and running out of funds half way through the project, but is also 'interest only' until the completion of the project when it reverts to a repayment loan. The added potential financial gains of building a new development in a popular tourist region such as the Costa del Sol is also an advantage, given that self-builders often find their finished property is worth much more than it cost to construct.

Benefits of a self-build mortgage:

• Loans are paid out in set stages
• There is no added interest on payments until completion of the property
• Design and construct your own home according to your specifications and requirements

In order to qualify for an auto-promoter mortgage of this kind, the client must be in possession of:

• A plot of land that has been officially registered with the corresponding Land Registry
• A completed project designed and revised by an architect
• A construction license solicited by the town hall that corresponds to the location of the project

Contact Domus Venari for further information on how you can design and build your own villa on the Costa del Sol and to be introduced to banks and mortgage brokers who can assist in the process.