Securing development finance to build a house or houses in Spain can be challenging. While it is possible to secure bridging loans, commercial mortgages, and development finance in Spain, lenders often have €1m minimum loan sizes. Others do now offer self-build mortgages.
Yourspanishmortgage has access to a London-based funder that recently issued €3.5 million to support a property development building 14 townhouses and 2 detached houses in Madrid. The facility cost 0.88% per month over two years, and the builder had a 40% deposit.
The same lender also provided funding for a client to refurbish and develop a high-end restaurant in Ibiza. Their client borrowed €1.4 million over 24 months.
Can international clients access development finance in Spain?
Yes. Spanish development loans are available for both domestic and international developers to finance high-end residential, holiday homes, and commercial developments.
One lender recently helped a non-Spanish developer with funding for the construction of a complex consisting of fifteen holiday homes in Mallorca. The client had identified a plot of land in a prime location, agreed the purchase price and obtained the necessary permits and approvals from the local authorities. However, they lacked the capital required to commence construction.
The developer approached several Spanish banks. The local banks were keen on providing financing provided that the developer pre-sold 70% of the units, and would only cover 50% of the construction costs.
After contacting another lender that was impressed with the location, the design of the project, and the strong demand for holiday homes in that part of Mallorca it agreed to assess the application. After conducting its due diligence, the London-based Spanish lender issue €10 million in finance structured in two phases, to suit the developer’s specific needs.
The first phase provided the developer with about €2 million to complete the purchase of the plot of land and start site preparation works. The second phase provided an additional €8 million to finance the construction of the holiday homes and cover the loan’s interest during the construction phase.
The rate was 0.90% per calendar month, which is higher than some other Spanish banks charge, but it did not come with any non-utilisation or commitment fees. They would also not provide the flexible funding the developer needed.
Do you need a Spanish mortgage or Spanish Development Finance? Contact yourspanishmortgage.co.uk for expert advice
Recent Comments