Bridging Loans | Spain

 

All you need to know about bridging loans in Spain

Belgravia Property Finance have a few very unique funding options for short term Bridging loans in Spain. Mostly these options are restricted to first charge bridging loans against residential or commercial (other asset types can be considered) property in popular high end locations. Loan to values (LTV) are normally available for capital raising up to 60-65% of the property value, and up to 100% of build costs for refurbishment and development projects.

Bridging Loans in Spain for less, our terms say it all

 

Rates and fees will be a key consideration when borrowing funds on a short term basis. Our partner firms offer bridging loans at competitive rates.

  • Interest rates: 0.60%-0.90% per month
  • Loan sizes: €250,000 – €10,000,000 range but can consider loans of up to €25 million.
  • Terms of loan: 6 months to 3 years
  • Currencies: Euro and Sterling available
  • Arrangement Fee: 2.0%

 

Interest Rates, fees and other costs

 

Belgravia Property Finance now offer bridging loans from 0.60%-0.90% per month, interest is normally rolled up within the loan, so that no monthly payments are required, but the option to pay monthly is available.

Admin fees are payable, for short term loans in Spain these are from €1,500 for locally domiciled borrowers or non standard asset types or where there is an overseas (i.e. BVI company) ownership structure involved, the fee may increase. The main costs to consider when taking a bridging loan in Spain are;

  • Arrangement fees
  • Interest rate
  • Admin or commitment fees
  • Valuation fee
  • Legal fees

 

Fast Finance – time to complete

 

Funds can be made available at very short notice, 3-4 weeks is not an unrealistic completion time for straightforward applications, if speed is of the essence it is possible to complete a bridging loan in a matter of weeks. If a suitable valuation has already been carried out this will help speed up the process, as will instructing lawyers to complete due diligence as soon as possible.

 

General lending criteria, and asset types

 

Will I qualify for a Bridging Loan in Spain? It is not a difficult process to obtain a bridging loan, unlike a mortgage which is subject to affordability. Although as with a mortgage and most other forms of property finance, checks will be made on the borrower, this means SL companies will have a credit search carried out, as well as the majority shareholders of the company borrowing the funds, searches are normally carried out by Equifax Spain (www.equifax.es), to obtain a report you need to email your request to sac@equifax.es along with a copy of your ID card or Passport.

Types of property deemed suitable for bridging loans in Spain;

  • Residential investment property ie. Holiday or long let Villas and Apartments
  • Commercial property, can be let to tenants or owner occupied
  • Hotels (considered case by case)
  • Care Homes (considered case by case)
  • Land with or without planning (normally considered as secondary security)

Personal guarantees are a normal requirement for a loan if the borrower is a limited liability company ie. a Spanish SL company or company from an overseas jurisdiction ie. BVI company.

 

Currency considerations

 

Bridging loans in Spain are available in Euros (€) or Pound Sterling (£). Careful consideration should be given to the currency of the loan, and the choice is normally down to the borrower.

Clearly if the bridging loan is being raised in Spain to fund a UK based project funded in Pound Sterling and this UK project will also be the eventual exit for the loan (the repayment strategy) then one would avoid the pitfalls of a sudden move in the wrong direction of the EUR/GBP exchange rate if borrowing was in Pound Sterling.

Some people may intentionally take a currency risk with the view that they will be on the right side of the trade, this can be a risky move, due to the short term nature of bridging loans.

If funds are being raised for a Euro purchase or project then normally funds would be borrowed in Euros, this is assuming the repayment strategy will also come from Euros.

 

Lending scenarios for a Bridging Loan in Spain

 

Case Study 1

A client recently completed the build of a villa and required to refinance the loan that he borrowed to develop the property and also raise an additional amount to purchase a new development site. He intends to sell the property but knows this may take 6-12 months to achieve the best price. Belgravia Property finance arrange a facility secured as a first charge for a term of up to 18 months allowing enough time for the sale to go through. Client is a UK national living in Spain although non UK domiciled for tax purposes.

 

Case Study 2

A developer approached Belgravia to raise funds to against a commercial shopping complex in a busy tourist town. The property did have a small mortgage that was repaid when the bridging facility was drawn, allowing a 1st charge for the bridging lender. The funds raised were used to further expand the commercial building to provide a new street facing unit to rent to a long term tenant. The exit is the refinance of the whole building once works are complete to one of the largest Spanish banks. The security property was owned by a Spanish company (an SL company) and the owners were a couple, a UK national and Bulgarian national, both living and working in Marbella, Spain.

 

Case Study 3

A British couple based in the UK owned a luxury residential villa in Malaga, Spain. The property was used as a holiday let, but the couple had decided that they wanted to downsize this property and had already found the perfect apartment and put down a deposit. They needed funds very quickly in order to complete on their new apartment, once terms were issued and accepted within a day, the process of instructing valuations and the legal work started, completion took place within 4 weeks – this process can be quicker or slower case by case depending on how simple or complex the whole transaction is.

 

For further information on any of the products that we offer, or to discuss your funding requirements please contact us on; 0203 651 5053 or finance@belgraviapf.co.uk

 

Learn more about bridging loans in Scotland and Ireland.

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