Calculated in GBP for ease of illustration only
LOW RISK INVESTMENT
3/4 Bedroom 3 Bathroom Detached Villa with Private Pool.
Purchase Price = £300,000 + IVA (vat) - 10% = £30,000 = £330,000
1. View properties - make a reservation approx. £3,000 (refundable)
2. Approx. 45 days later 30% Deposit paid = £330,000 @ 30% = £99,000
3. Completion = 70% mortgage with our Spanish banks (interest rates around 0.5%)
A) Full Capital & Repayment Mortgage = £231,000 = £885 per/month
B) Interest Only = £231,000 = £96.25 per/month
High Season - June/July/August/Sept = £8,000 per/month = £32,000
Mid-Season - April/May/Oct/Dec = £6,000 per/month = £24,000
Low Season - Jan/Feb/March/Nov = £4,000 per/month = £16,000
Taking into consideration the yearly mortgage costs (Full Capital Repayment) = £885 mth = £10,620 per/annum.
And just Summer rentals 16 weeks = £32,000 leaves a sizeable profit or extra pension income.
(£32,000 - £10620 = £21,380).
This profit would cover the capital raising (30% deposit) i.e. £99,000.
ASK US ABOUT OUR GUARANTEED SUMMER RENTAL GUARANTEE.
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We have a very close relationship with many Spanish Banks due to the levels of business that we put through. It is fair to say that we have never had a mortgage case declined as arranging a mortgage is still done at a local level unlike in the UK/Ireland. So, if your credit history is less than perfect or you don’t quite fit into the box, then we are able to self certify an application in such a way to be acceptable.
A) Equity Release (Cheapest Option) - 3% interest charge = £247.50 per/mth
B) Secured Lending - 4% interest charge = £800 per/mth
C) Unsecured Lending - 7% interest charge = £930 per/mth
Whichever option is chosen, the intention is for the loans to be repaid in 3 years by remortgage of the Spanish property which will have enough equity to repay the £99,000 loan.
If the property (investment) was rented for only 16 weeks a year out of a possible 52 weeks, the investment is still self-funding (Paying for itself).
Rental = £32,000
Mortgage = £10,620
Deposit Loan = £13,200
(32,000 - £23,820 = £8,180)
In the first 3 years taking the worst scenario, the profit is only £8,180 but as there is a full capital repayment mortgage in place, the mortgage loan is being repaid and reducing.
Now the investment is paying for itself.
After the 3rd year the initial loan for the deposit is consolidated into the Spanish mortgage at a very low interest rate.
(231,000 over 3 years reduced to 200,000)
New mortgage = £200,000 + £99,000 = £299,000 = £1,145 per/mth (£13,746)
Rental = High Season only = £32,000
Profit = £18,254 (£1500 per/mth income to boost retirement.
As can be seen all the above provides a great investment.
Below is what the investment will do over time, and we feel for the next 20 years the market will be very kind to us.
Currently the property market in this region is increasing at 10.66% per/annum
We calculate at only 6% (In early 2000's the market was growing at 19%)
We must stress - this region - all regions in Spain are different - this is an up and coming region.
£300,000 - Year1 @ 6% = £18,000 = £ 318,000
£318,000 - Year2 @ 6% = £19,080 = £337,080
£337,080 - Year3 @ 6% = £20,224 = £357,304
£357,304 - Year4 @ 6% = £21,438 = £378,742
£378,742 - Year5 @ 6% = £22,724 = £401,466
£401,466 - Year6 @ 6% = £24,087 = £425,553
£425,553 - Year7 @ 6% = £25,533 = £451,086
After just 7 years enjoying your property, the investment aspect is significant. We have used just 6% growth per year over a 7 year period and it is expected that properties will increase by 100% over a 7 year period, (£300K up to £600K) which is much higher than the above example.
Let's use just the example:
Original Purchase Price = £300,000
Value after 7 years = £451,086
Estimated mortgage balance = £190,000
If the property was sold after 7 years not only have holidays been enjoyed free of charge and a fantastic income been had, but there is still a lump sum of £261,086.
The bigger the property, the bigger the investment.
Olivos is one of our Residential properties located in the popular Doña Pepa urbanization.