Securing a Mortgage for a Balearic Island Property Purchase Above €1 Million

• Client: Property developer
• Property: Holiday home in the Balearic Islands valued at more than €1 million
• Loan: €770,000
• LTV: 70%
• Product: 30-year capital repayment mortgage with a 10-year fixed rate
• Additional Finance: €150,000 renovation budget at the same LTV and terms

Enness was approached by a client looking to purchase a holiday home in the Balearic Islands with a property value of more than €1 million. The client intended to retain the property for the long term, using it as a family holiday home and ultimately passing it on to their children.

The client wanted to maximise the amount they could borrow against the property. However, their income presented a challenge during the affordability assessment. Although the client owned their own company, they worked as a property developer, meaning their income could fluctuate significantly from one year to the next depending on the timing and performance of their development projects.

Enness identified a lender that could take the client’s circumstances into account and offer a higher loan-to-value than might otherwise have been available. We secured a €770,000 mortgage at 70% LTV, allowing the client to fund a substantial proportion of the property purchase while retaining more of their own capital.

The mortgage was structured as a 30-year capital repayment loan with a 10-year fixed rate. This provided the client with a long initial period of certainty over their mortgage payments, after which they could review and refix the mortgage based on their circumstances at the time. The indicative monthly payment was approximately €4,000.

The structure also avoided the need for the client to take out life insurance as a condition of the mortgage, with traditional property insurance required instead. In addition, the client was able to use a company structure intended to help manage potential inheritance tax considerations when eventually passing the property to their children.

The client was also planning renovation works approximately six months after purchasing the property, with a budget of around €150,000. The lender was able to provide finance for the planned works using the same LTV and mortgage terms, allowing the client to improve the property without having to arrange a separate financing solution.

The mortgage solution did not require the client to place assets under management (AUM) with the lender. The lending structure was also available for properties across Spain, subject to the lender’s criteria, with loan terms ranging from 10 to 30 years depending on the borrower’s age and circumstances. The lender required the mortgage to be repaid before the client reached the age of 75.

This case demonstrates how specialist lender selection can be particularly valuable for property developers and business owners whose income can fluctuate from year to year. By taking a broader view of the client’s circumstances, Enness was able to secure a 70% LTV Spanish mortgage while also accommodating the client’s longer-term plans for the property and proposed renovation works.

Enness regularly assists international buyers looking to finance property in Spain, including borrowers with complex or variable income. To discuss your circumstances, speak to a mortgage specialist.

Risk Warning:
Mortgages are secured against property and the property may be repossessed if repayments are not maintained. Variable or fluctuating income can affect affordability, and borrowers should ensure that mortgage repayments remain sustainable throughout the term. Future interest rates may also differ when a fixed-rate period ends.

Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal or tax advice. Finance is subject to status, underwriting, property assessment and lender criteria. Terms, rates and availability will vary depending on individual circumstances and the proposed transaction. Any tax or inheritance planning should be considered with an appropriately qualified professional.