Financing measures for your property on Menorca

Financing your property is probably the most demanding challenge when buying real estate on Menorca. In order for your concern to be a complete success, it makes sense to obtain detailed advice on the subject of real estate loans in advance. In order to know how you should proceed, we have compiled the essential points for you.

Financing real estate through a German banking institution
Irrespective of whether it is an apartment or a house, it is preferable for German citizens to finance through a German bank. This is due to increased transparency and fixed interest rates for real estate loans. Currently, interest rates are still very low due to low global interest rates and there are good conditions for advantageous financing.

From the perspective of a German bank, the distance is an obstacle to the financing of your planned home in Spain. Some bankers may find it difficult to evaluate a property from a distance, taking into account the general price level of the area. So contact your trusted banker, but be prepared for contact with different banks.

Your prospects with a German bank are much better if the previous owner is also German.
Also the deposit of real estate in Germany as security may prove to be advantageous on the financing.

The financing option with a Spanish banking institution
When financing through a Spanish bank is an alternative. On Menorca and in Spain itself there are also branches of German banks with German-speaking staff. As banks based in Spain, however, they work according to Spanish customs. For this reason, it is important to be prepared for certain deviations.

In Spain, for example, the interest rate is not fixed as in Germany, but variable. Thus the global economic or economic fluctuations can determine their interest rate with the granting of credit as well as afterwards.
In order to understand the complexity of the subject, it is therefore advisable to consult an external expert.
This makes it possible for a third bank to cover interest rate fluctuations. If economic conditions lead to an increase in interest rates, the security comes into force and the loan is granted via the loan applied for by the third-party provider.
The interest rate on real estate loans in Spain is officially linked to EURIBOR. This is the official interest rate at which banks operating in the EU grant each other money. If the EURIBOR rises, the interest rate for your property will also rise.

To what extent can you still influence debt financing?
The amount of the equity to be invested has a significant influence on the interest rate and the loan conditions. The higher the equity, the lower the loan costs.

In addition, it makes sense to limit the loan period to a minimum, especially if you have a financing with a changing interest rate.
The country of residence of the borrower is also important for financing by a Spanish bank. If you are already resident in Menorca or Spain, this will also have an advantageous effect on the loan conditions.