I am not a millionaire, yet.  I don’t have a healthy 401k, a rich relative on life support, or a fat wallet. The cave house I am buying in Spain is, accordingly, cheap. But, even an inexpensive Spanish property can be problematic to finance.

American banks, to my knowledge, will not give you a mortgage for a house in Spain.  Spanish banks might give you a mortgage, but as a foreigner, you will only qualify for a 60% mortgage.  What this means is that you will have to come up with 40% of the purchase price yourself.  You also have to be able to put 10% of the purchase price down in order to take the property off the market.

 

So, if the purchase price is 100,000€, you need to have 10,000€ to put down to hold the property and a further 45,000€ to buy it, assuming the Spanish bank gives you a 60% loan for the remaining 90,000€.

But, wait, there’s more…  The legal fees and such will run you 10% on top of the purchase price.

 

In other words, a 100,000€ place would actually cost you 110,000€, and you, dear reader, would have to come up with 55,000€.

 

How did I do this?  Well, I took out a personal loan, and when our house in the USA sells, we should be able to pay it off.  If you can’t come up with roughly 50% of the purchase price, you’re stuck.

But, if you do happen to have access to the funds you will need, you still need to keep one thing in mind.  After you put 10% down, you have to complete the transaction within 3 months, or you will lose your downpayment!

 

Next time, I will talk about our lawyer, the legalities of buying a house in Spain, and our real estate agents…

 

-S