Buy a Vacation Home in Spain with an Equity Credit Line

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Home Equity for your Spanish Vacation Home

An equity credit line offers opportunities to buy that vacation home. Find out how to tap into your home equity to take advantage of the real estate market:

Buying a vacation home requires planning and some research; vacation property prices in Spain are fairly low right now, as you can see on this agency site. Selecting the right location involves finding where your best vacation took place: Once you narrow down the region, focus on the type of property that you want; are you looking for an apartment on the beach, or a villa in the mountains?

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Both areas offer a lot of desirable vacation opportunities, so narrow down your choice and begin researching prices in the area. Financing your vacation home with an equity line of credit provides some significant advantages.

Advantages of an Equity Credit Line
Seeking a home equity line of credit, offers significant benefits: First, there are no closing costs associated with this procedure. Closing costs generally range from 1% to 2% or higher, for a typical mortgage loan, whereas a home equity line requires an appraisal and a small application fee, which only costs a few hundred dollars.

According to the I.R.S, a home equity line of credit is tax deductible. Also, paying an equity credit line requires substantially lower monthly payments than a traditional mortgage, since this credit line provides an interest-only payment plan.

Obtaining funds usually requires a few weeks: The advantage of having substantial funds available for your Spanish vacation property gives you the ability to not only close immediately, but you might be able to negotiate a better price for a cash purchase. Lastly, some vacation homes are situated in areas of Spain with high foreclosure rates.

Financial restrictions limit banks from loaning money on condominiums that have more than a 50% default rate and have less than 50% owner-occupied units. Having the funds lets you bypass this problem, since many desirable vacation properties have financing issues.

Obtaining a Home Equity Credit Line
When considering an equity credit line, research rates from Bankrate:Here they provide national and state rates for a home equity line of credit. Most banks require an appraisal, a copy of your homeowner’s insurance, along with your mortgage statements. In addition, an application with proof of earnings, along with a complete credit profile, with the appraisal and application fee are all that is required. Approval times vary, but most banks offer approvals within two weeks, and drawing from the line only requires writing a check.

Owning a Spanish vacation home can make a dream a reality, with a home equity line of credit. In addition, renting out your vacation home during peak times, creates cash flow that helps pay the equity credit line and restores your home equity.

Adam Smyth