Bridging Loan For Property In Malaga

By Georgia Galloway | Friday 8th September 2023 | 5 minute read

When investing in the thriving property market of Malaga, timing is everything. That's where a bridge loan can make all the difference.

The strong appeal of Malaga's vibrant culture, stunning landscapes, and promising property market make it an attractive location for property investment. With around 80% of residents owning their properties outright, buying property in Malaga presents lucrative opportunities.

Navigating the Spanish property market can be complex due to fluctuating trends influenced by global events such as COVID-19.

This guide will provide tips on avoiding potential pitfalls during the purchase process. Whether you are considering traditional financing routes or exploring alternative options like a bridging loan for flexibility and speed - we've got you covered!

Picturesque street of Mijas with blue flower pots in facades, a traditional whitewashed village, Malaga, pain

Why Malaga is a Great Location to Buy Property

Are you searching for a location that offers an impressive return on property investment? Have you considered the sun-drenched city of Malaga? With its thriving tourism industry and enticingly high rental yields, Malaga might be the perfect place for your next big venture.

The Appeal of Malaga for Property Investment

Cultural Allure: Malaga is not just a tourist destination but also a dream for investors. The amalgamation of its past, culture, and modern amenities render Malaga's residential and business properties highly valuable. Imagine investing in beachfront developments or vibrant urban areas - this is what makes property in Malaga so rewarding.

All-Year-Round Tourism: Unlike other locations where seasonal dips can significantly impact rental income, Malaga enjoys a 12-month tourism season. No matter the season, there's a regular influx of tourists to landmarks such as Alcazaba Fortress and Picasso Museum, making owning property in Malaga financially advantageous. This is another reason why owning property in Malaga can be highly lucrative.

Rental Yields: Let's talk about potential earnings. In the current rental market in Malaga, renting out a two to three-bedroom apartment in the city centre can fetch around €1,000 per month. During peak seasons, these rates often double, offering an even greater return on your investment.

If time is of the essence when buying at an auction or securing quick finance solutions while waiting for longer-term mortgage arrangements to be finalised, a bridge loan can be a handy option. 

Bridging loan providers offer competitive interest rates and flexible terms, allowing fast access to the necessary funds without the delays associated with traditional bank loans. This can speed up the acquisition process, especially in hot markets like the southern coastlines of Spain, including the vibrant metropolis of Malaga.

Malaga's commercial properties come with a heap of perks, drawing in businesses from around the globe. The Mediterranean city's cosmopolitan lifestyle is a big draw too.

Process of Purchasing a Property in Malaga

Purchasing a property in Malaga involves more than just finding the right place. It also requires understanding the Spanish property market, seeking legal advice, and navigating the property chain.

Understanding the Spanish Property Market

It's important to know the Spanish property market when buying in Spain, particularly in places like Malaga, where purchase prices vary widely. 

Trends play a significant role in the Spanish property market. Cities like Malaga have experienced continuous growth thanks to their increasing popularity among tourists and investors.

Navigating Legalities

Aside from finding the perfect house or apartment, several legal aspects should be considered before calling it your home sweet home. These include verifying title deeds, conducting land registry checks, and ensuring there are no outstanding debts that could cause issues for unsuspecting buyers.

There are also filing costs associated with the purchasing process. These include taxes on transferable assets (ITP) for second-hand housing, VAT for new construction, and stamp duty fees. 

Additionally, appraisers may charge valuation fees to assess the value of your home before selling, and additional charges may be imposed by notaries public involved in the transactions. Budgeting for these expenses is important when planning to buy your dream property abroad.

Funding Your Purchase With Bridging Finance

If funding seems to be a potential hurdle between you and your dreamy sea-view villa, there's no need to worry. You can consider bridging finance options offered by financial institutions in Spain. 

These short-term loans typically range from £260,000 to £25 million and provide immediate liquidity during transition periods when moving homes. They can be especially useful while waiting for the sale proceeds from your previous residence to be fully processed.

Based on each case's specifics, you might get the funds within a week after submitting the approval request. This makes bridging finance quite appealing.

Best Locations to Buy a Property in Malaga

The city of Malaga, steeped in rich history and adorned with scenic landscapes, offers potential property buyers an array of attractive locales. Whether you're interested in high tourist rental returns or seeking opportunities for refurbishment finance, this Spanish coastal gem has something for everyone.

Popular Neighborhoods in Malaga

El Palo is a delightful neighbourhood known for its beautiful beaches and bustling cafés. With average prices per square meter at €2,200/m2, it's affordable if commercial property finance piques your interest.

A stone's throw away from the city centre lies Playa de la Malagueta. This beachfront location commands higher prices, averaging €4,600/m2. Given its popularity among tourists, it could be just the spot if you aim to capitalise on tourist rentals.

If you seek tranquillity, then El Limonar might tickle your fancy. A favourite amongst locals due to its serene ambience and proximity to amenities, you can expect prices around €3,300/m2.

In contrast, Centro Histórico offers cultural immersion right within the heart of Málaga, where properties are priced at about €4,160/m2. The area buzzes all year round, offering ample opportunity for refurbishments and retail ventures.

Paseo Marítimo de Oeste provides another excellent sea-front option where costs hover around approximately €2900/ m², making it appealing if the balance between lifestyle attraction and affordability is key.

Cerrado de Calderón boasts scenic views over Málaga Bay while still maintaining easy access into town - contributing towards an average cost per square metre reaching up to 25210€/m², which may prove lucrative when considering future resale values alongside potential rental incomes during peak tourism periods.

Acquiring a Property in Malaga

When purchasing a property in Malaga, the possibilities are vast, but the process can be intricate. Understanding your financing options is crucial for smooth navigation.

Whilst a conventional mortgage is a popular selection for numerous purchasers, it's significant to know that these credits come with set-up charges and different interest rates from lenders. Therefore, it's essential to shop around and compare offers. Mortgage loans typically offer longer terms and potentially lower interest rates than other borrowing options. 

Alternatively, bridge loans have become a fast and flexible financing solution. Bridging lenders offer competitive interest rates starting from 0.44% per month.

Bridging loans come with terms ranging from three months to three years, providing borrowers ample time to repay the loan while encouraging faster repayment than traditional mortgages.

Invest in Malaga Properties with a Bridging Loan

For those looking to invest in properties, particularly in sought-after areas like Malaga, bridging loans have become the preferred choice. These loans offer quick decisions and flexibility that outshine traditional financing options.

Conventional bank loans often have a lengthy approval process. In contrast, bridging loans stand out with their speedy arrangement. Lenders make quick decisions, allowing borrowers to secure funds rapidly. This is a significant advantage when time-sensitive investment opportunities arise.

Lenders' confidence also plays a crucial role in providing bridging loan facilities. These loans focus more on the asset value and potential profitability than the borrower's creditworthiness. Lenders are more inclined to offer such arrangements due to a heightened trust in the market.

This increased lender confidence provides investors with much-needed liquidity, especially for those facing unique financial circumstances or pursuing unconventional investment strategies.

We're experienced financial specialists who arrange short-term bridging loans for property owners, securing you the best deal from over 200 bridging loan providers, including private investors and family offices.

Get expert assistance today; we're on hand to answer any questions about bridging loans.

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Call our friendly team on 01202 612934, we're ready to help.

Bridging Loan for Property in Malaga FAQs

Can a foreigner buy a house in Spain?

Absolutely. Foreigners are allowed to purchase properties in Spain. However, they need to obtain a financial number (NIE) first.

What are the pitfalls of buying property in Spain?

Potential pitfalls include legal scams and unexpected costs such as transfer tax or notary fees. It's crucial to seek local advice before purchasing.

Can I live in Spain permanently if I buy a property?

Owning property doesn't automatically grant residency rights, but it can simplify obtaining long-term visas or residence permits.

What is the criteria for getting a bridging loan?

To secure a bridging loan, lenders typically require proof of an exit strategy, a valuation report of the property involved, and evidence that repayments can be met during the term.

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