Are you looking to purchase a home in Marbella, Torremolinos or Malaga? Look to financial institutions offering online mortgage deals rather than conventional High Street banks! The origination fee for online mortgage applications is on average 1.35% cheaper than opening a mortgage account via the traditional route.

Home buyers could save as much as EUR 1,316, according to Bankimia, who based their findings on an average mortgage of EUR 97,495. Bankimia specialise in comparing financial online products and conducted a study into the maximum fees charged by the most important financial institutions in Spain, both off-line and online ones.
 
Customers opening a conventional mortgage account with a High Street bank will be charged on average a 1% commission fee for the initial credit check and application and a further 2.6% for opening the mortgage account.
 
Online banks on the other hand charge far less. The initial study commission is a meagre 0.6%, while the fee for opening a mortgage account is only 1.25%, more than one percentage point less than a High Street bank would charge. This means, according to Bankimia’s study, that customers opening a traditional mortgage account with a typical High Street bank would be paying nearly twice as much as they would with an online mortgage provider.

The current housing crisis in Spain means there are plenty of resale and new apartments available at prices between EUR 85,000 and EUR 250,000, even in prestigious locations like Marbella at the Costa del Sol, which is why the average mortgage needed for property purchases in Spain is comparatively small.

In June, the average mortgage application was for just EUR 97,495, according to data released by the National Statistics Institute. Financing a home via a traditional bank would therefore cost buyers EUR 2,534.87 for opening the mortgage account - an online financial institution would only charge EUR 1,218.68, saving buyers EUR 1,316.19 in the process.

Avoiding traditional Routes

In light of the Spanish Government’s many initiatives to promote holiday home purchases to foreign buyers such differences don’t bode well for Spanish banks coming out of their slump any time soon. Buying a home for cash is becoming a trend with overseas investors who buy homes in property hot spots like Miami, Florida and the Costa del Sol. It permits them to act quickly and allows them to snap up the best bargains at the lowest prices, since many desperate vendors, including Spanish banks, discount more heavily to please cash buyers.

Homebuyers from Scandinavian countries for example typically opt to take out mortgages at home, paying for their Spanish holiday home in cash, thus cutting out Spanish High Street banks completely. Buyers use currency exchange companies to make the purchase transfer at a far lower rate of commission, too.

Falling House Prices

According to real estate portal Idealista.com, Spanish house prices continued their decline in August this year, with the average price of a resale home now standing at just EUR 1,764 per square metre. This represents a fall of 9%, compared to August 2012. On average, August saw a home price decline of 0.6% across nearly all Spanish regions, with the exception of Navarra, where prices actually gained by 0.2%.

Rising Demand for Holiday Home Rentals

According to news provider El Mundo, more foreign tourists than ever before are choosing a rental villa or self-catering apartment instead of overnight stays in hotels or guesthouses. Throughout July 2013, more than 7.8% foreign holidaymakers surged to Spain. Some 2.5 million of them opted for self-catering accommodation rather than staying in resort hotels.

July saw a 2.1% increase, compared to the same month last year, in holiday bookings with private landlords or visitors renting villas and apartments via commercial sources, according to a survey prepared by the Spanish Ministry of Tourism.

If you are thinking of cashing in on this boom in the holiday rentals sector, beware of new legislation aimed to curb unfair competition within the hotel industry. The holiday homes rental market is huge and certainly worth investigating, if you’re thinking about purchasing a property in Marbella or elsewhere at the Costa del Sol. Just remember to stay clear of High Street banks, if you require a mortgage to finance your purchase!