The Spanish real estate market continues its recovery phase after the economic crisis and is confirmed as an attractive sector for investment. Either through the usual home purchase or as a consequence of the acquisition of a second home. The latter more suitable for investment operations. In any case, and thanks to the reactivation of the real estate market, these operations can become an alternative source for you to make your savings profitable in the medium or long term.
The lack of profitability in the international stock markets in recent months is causing many people like yourself to be looking for other options for obtain a benefit to your heritage. Furthermore, fixed income derivative products (time deposits, bank promissory notes, bonds, etc.) are not having a good time, as a result of the cheaper price of money by the monetary authorities of the European Union.
These products rarely exceed return levels on savings of 0,50%. The prospects, therefore, for your money are not the best you can find. You will have no choice but to go to other markets where you can make these movements more effectively. And among all of them, the real estate market is re-emerging with force. Or what is the same, the purchase of real estate as a formula for make operations profitable from now on.
Investment in brick returns
It is a sector closely linked to the Spanish economy and which was severely hit by the economic crisis. But now it resumes its role as a safe haven value again in the face of the few guarantees that most banking or financial products currently offer you. According to several studies in the sector, the potential for revaluation in the purchase of flats is again attractive to investors. And specifically, the acquisition of a second home is one of the most effective ways to make the operation profitable.
For this you have an increasingly powerful offer of mortgage loans. Taking advantage of the drop in margins in the benchmark index for mortgages, the Euribor. Not surprisingly, it is found in negative rates and therefore you can take advantage of this situation to buy a second home whose main objective is an investment operation. Currently, there are some credits of these characteristics with a spread below 1%. That is, you will have to pay less for your monthly installments from now on.
What do these operations consist of?
The purchase of a second each would have a double purpose. On the one hand, take advantage of the current economic situation to expand your assets. But on the other, get a return through this property. Either selling it when it has appreciated, or renting it. Even only during holiday periods. It will be an additional amount that will come in handy to adjust the budget. It will only require that you have more powerful savings than in other investments.
This is the moment where you can materialize this investment through a very dynamic offer that is clearly expanding as a result of the good economic data presented by the sector During the last months. Not surprisingly, these acquisitions have materialized in the form of investment in most cases. In the heat of the significant increases in their prices and that will lead to many people having achieved excellent capital gains on their movements.
Housing operations grow
The reactivation of the real estate sector in Spain is leading to an improvement in the number of contracts to acquire a second home in recent months. The Housing Price Index (HPI) corresponding to the second quarter of 2016, published by the National Institute of Statistics (INE), confirms an increase in operations of 3,9%. This data highlights the greater dynamism that this economic activity is registering.
It is an option to dispose of savings after the weak performance generated by bank products (deposits, promissory notes, etc.). They rarely exceed the 0,55% barrier, as a consequence of cheaper money. It even rivals the little confidence that the stock market arouses among investors during the first nine months of the year. Where the Ibex 35 is not behaving as expected by small and medium investors. On the other hand, and taking advantage of the best rates offered by the markets, it is influencing some investors to opt for the purchase of a house on the beach or in the mountains. Either for your personal enjoyment or as an alternative investment strategy.
Less amounts, but cheaper
Mortgage loans for the acquisition of a second home are being formalized under different contracting conditions with respect to the usual home. It does not suppose, as initially it could be thought, more advantages with respect to the traditional financing model. But on the contrary, they are more rigorous products in terms of the amounts they grant and their repayment terms. In any case, they can be contracted under lower interest a few years ago as a consequence of the drop in the benchmark index to which most of the mortgages subscribed at a variable rate are linked.
Because in effect, the Euribor has moved to negative territory, historically in recent months, by contracting to 0,059%. From 5,384% when it was listed in the middle of the economic crisis, in 2008. Therefore, this class of mortgages to formalize real estate transactions are cheaper to subscribe than before, as long as they are carried out on a variable interest rate. In this sense, the latest data provided by the National Institute of Statistics, corresponding to the month of June 2016, show that the 76,6% of the mortgages constituted use a variable interest rate, compared to 23,4% fixed rate. Euribor continues to be the most widely used reference rate in variable interest contracts, with 93,6% of new firms.
Characteristics of these mortgages
Those used for a second home maintain very well defined commercial lines. They offer a lower amount compared to the purchase of stable housing. Banks do not grant more than 75% of its appraised value. Another contribution that this financing model generates is that its repayment terms are also longer. They rarely exceed the 25-year barrier. It is explained because the profile of its applicants is older, in many cases people who have already reached 45 years of age. As a consequence of this peculiarity in the contracts, there is no choice but to shorten the repayment period.
Under these commercial constants, financial institutions have promoted an offer that is destined to satisfy these needs. In some cases, through ambivalent credits, that is, both for the first and second homes. Although this last option is marketed with a different contracting conditions. And in others, with proposals specifically developed for these acquisitions in the real estate market. In either case, they are taking advantage of the excellent interest rates generated by their promotions. In the most aggressive proposals, they can provide a differential below 1%.
What credits can be contracted?
Ibercaja has designed the Mortgage Evolves Mixed 5 which is intended for the purchase of second homes. Offering a maximum amount over 70% of the property's appraisal. The interest rate is determined by an initial fixed rate for a period of up to 5 years, and for the remaining 2,50%. Although complying with a series of requirements, it can be lowered to 1%. It contemplates a term for its amortization of up to 30 years.
The Variable Mortgage is Banco Santander's response to the real estate needs of families. It is referenced to Euribor + 0,99% from the third year, and 1,75% the first two. In its modality for second homes, it finances 70% of the purchase, with a return period of no more than 25 years. Under a different approach, BBVA is marketing the Fixed Mortgage. It is characterized because their interests vary depending on the agreed deadlines to return the amount. Between 2,51% (for a maximum of 15 years) and 2,85% (20 years). In all cases it finances 70% of the new property. Its acceptance requires some regular income over 1.500 euros per month.
The ING Direct Orange Mortgage is another alternative available to users to carry out this real estate transaction. For an amount of 75% of the appraisal value, provided that the operation is formalized from 50.000 euros. From Euribor + 0,99%, with a minimum of 9 and a maximum term of 40 years. Another of its contributions is that it is made free of commissions and other expenses in its management.
Direct Office offers Euribor + 1,10% and is exempt from commissions. Up to 60% of the purchase price, for a maximum amount of 600.000 euros and with 30 years ahead to close the operation. Its great contribution lies in the fact that its holders can benefit from the improvement in the interest rate, with a bonus of up to 1%. Through direct debit of your payroll, home insurance and hiring your cards. The Openbank Mortgage is presented to its clients at Euribor + 1,25%, provided that its conditions are subscribed. To the above, add the direct debit of domestic bills. Finances 70% for a maximum term of 25 years. Focuses on amounts starting from 50.000 euros, and does not incorporate any commission. Another of its contributions is that it allows its early amortization, without any penalty.