Introduction
Spain attracts many foreign investors and real estate buyers due to its warm climate, beautiful scenery and developed infrastructure. However, there are a number of restrictions that can affect your real estate plans. One such restriction is the inability to obtain a mortgage on a property under construction.
Reasons for restrictions
Risks for banks
The main reason why banks in Spain do not grant mortgages for projects under construction is the high risks involved. Uncompleted projects can face numerous problems such as construction delays, bankruptcy of the developer or changes in legislation. These factors increase the likelihood that the property will not be completed or will be delivered with significant defects.
Consumer protection
Spanish legislation also aims to protect consumer rights. The country has introduced strict regulations regarding the sale of real estate under construction, which require buyers to obtain a guarantee of project completion. Banks, in turn, avoid financing properties under construction so as not to be liable in case of project failure.
Alternative ways of financing
Although it is not possible to obtain a mortgage on a property under construction in Spain, there are alternative ways to finance the purchase of real estate:
Payments by stage of construction
One of the common methods is the payment scheme by construction stages. The buyer enters into a contract with the developer and pays certain amounts at each stage of construction. Such payments are often protected by bank guarantees, which minimizes risks for the buyer.
Mortgage after completion of construction
Another option is to obtain a mortgage after construction is completed. In this case, the buyer can conclude a preliminary agreement with the bank, which guarantees him a loan after the object is commissioned and registered in the real estate registry.
Conclusion
Buying a property under construction in Spain can be a complicated process due to restrictions on obtaining a mortgage. However, by being aware of the alternatives available and the peculiarities of Spanish law, buyers can find ways to finance their projects. It is important to thoroughly research all available options and consult with professionals to minimize risks and successfully complete the transaction.