Find out about the particular characteristics and access requirements of mortgages for second homes on the Costa Blanca.
Interest in second homes continues to boom. Despite forecasts to the contrary due to the rise in interest rates and the tightening of mortgage conditions, this type of property continues to gain strength, already accounting for 13% of the total demand according to the report “Profile of the second home seeker” by Fotocasa.
In addition, the gap between those looking for a second home to buy and those looking for a second home to rent is narrowing, specifically 54% compared to 46% respectively.
The Costa Blanca continues to be one of the favourite places to buy a second home, both for national and international buyers. Its climate, good communications and paradisiacal beaches, together with the lower price of properties in this area compared to similar properties in other countries, are some of the reasons why more and more people are looking for a second home on the Costa Blanca, either to enjoy it or to make it profitable by renting it out.
However, not everyone has the financial capacity to make such a large purchase without the need for financing. For this reason, in this article we want to focus on mortgages for second homes on the Costa Blanca to tell you the conditions and requirements that you must meet to be able to access one of them.
Conditions of mortgages for second homes on the Costa Blanca
As far as the conditions of mortgages for second homes on the Costa Blanca are concerned, we could say that, in general terms, they are usually a little less advantageous than the conditions for a mortgage for a regular home.
Lower amount financed
One of the main differences between a mortgage for a primary residence and a mortgage for a second home is the percentage of financing that the bank will grant us.
If a mortgage for a first home is usually granted 80% of the deeded value (or of the appraised value, depending on each bank), when applying for a mortgage for a second homethe amount financed is usually between 60% and 75%.
Rarely do banks offer 100% financing unless it is one of their portfolio properties.
Shorter repayment period
Another of the great peculiarities of mortgages for second homes on the Costa Blanca is that the repayment period granted is usually substantially shorter than that of mortgages for first homes.
- Repayment period for first homes: up to 40 years
- Repayment term for second homes: usually no more than 25 years .
It should be borne in mind that this banking product is usually requested by elderly people, which may result in the repayment period granted being even shorter.
Higher interest rate
The interest rate associated with a mortgage for a second home on the Costa Blanca is usually somewhat higher than that associated with first homes. This, together with the shorter repayment period, means that the monthly repayments for a second home tend to be somewhat higher than those for a primary residence. Despite this, other factors must also be taken into account, such as the price of the property in question, the type of loan chosen (fixed or variable) or whether other products linked to the financial entity are contracted.
Real estate market report in Costa Blanca North
We explain how the price of housing is in the area and our forecast
Requirements for mortgages for second homes on the Costa Blanca
The requirements for mortgages for second homes on the Costa Blanca are also stricter than the requirements for mortgages for primary residences. This is because when granting a mortgage for a second home, the bank assumes a higher risk. The bank understands that if the client starts to have problems to continue paying the instalments, it will always give preference to the payment of the main residence.
Higher level of income
Given that most of the time the owner has to pay two mortgages at the same time (the one for the second residence and the one for the main residence), the level of income required by the bank to take out a second mortgage is usually higher. The bank has to make sure that the customer will be able to afford both mortgage products at the same time.
Higher volume of savings
Given that the amount financed by the bank is lower, the amount that we will have to have saved to opt for this financial product will be consequently higher.
We must not forget that, in addition to the percentage of the total price of the property that the bank does not finance, we will also have to have money saved to cover all the costs associated with the purchase of a property: Transfer Tax (or VAT if it is a newly-built property), Notary’s fees, Notary’s fees, Notary’s fees and Land Registry fees.
Other possible debts
When granting the loan, the bank will also check if the client has other possible debts such as: personal loans and/or credits or unpaid bills for electricity, water, telephone, gas, etc.
Additional guarantees
Finally, and although it is not usual, another requirement that can be applied to the granting of a mortgage for a second home on the Costa Blanca is an additional guarantee. This guarantee can be a regular home (if it is not already mortgaged), a commercial property or any other property that the client owns. The signature of a guarantor who owns property and can guarantee the operation would also be sufficient.
Are you looking for a second home on the Costa Blanca?
If you are looking for a second home on the Costa Blanca, you may find what you are looking for at Hispania Homes. Be the first to find out about new properties coming onto the market and possible price reductions so that you don’t miss out on any opportunities.
