Everything you need to know about mortgages for new construction homes

From the quality of materials to shared spaces, finishes, and designs, there are many differences between new-construction homes and second-hand properties! Additionally, mortgages for brand-new properties also have certain particularities.

One of the most distinctive features of new properties is the delivery times, which vary significantly compared to used properties. Therefore, it is essential to be well-informed about the application process, the requirement amount, and deadlines, among other things.

Mortgages for new construction homes

As mentioned, mortgages for new construction present peculiarities and different timelines compared to second-hand homes.

The most important points to consider are:

• Payment in stages

The purchase of a newly constructed house generally occurs in three stages. First, the down payment or reservation of the property is made. Then, payments are made according to the deadlines agreed upon in the sales contract. Finally, the remaining value of the property, minus the payment already made, is financed by the mortgage.

• Bank types

This type of mortgage can be managed at any bank branch. The same institutions handle:

1. The plans
2. The building book
3. The builder’s documentation
4. Energy efficiency certifications
5. The feasibility study with the sales contract

Often, when requesting financing below the property’s value, banks are more willing to finance 100% of the purchase.

• Loan application

Financing can be requested when the builder announces or knows the completion date, typically between 2 and 6 months before the property’s delivery.

• Mortgage signing

The loan signing usually coincides with the deed signing. To avoid last-minute surprises, delays, or changes in the financial market, it is recommended to manage the mortgage no more than three months before the project’s completion.

Standard mortgage vs new construction mortgage

Beyond aesthetic qualities and additional services, new construction homes present a particularity when applying for a mortgage: the requested amount is generally lower.

The payment of reservations and installments agreed upon with the builder since the property’s acquisition reduces the amount to be financed. In other words, when applying for the loan, part of the property’s value has already been paid, ranging between 10% and 30%.

In off-plan transactions, this percentage can increase up to 50% depending on the purchase and delivery dates, as it can take between 3 and 5 years between these periods.

Generally, to reserve a new construction home, 10% of the property’s value must be paid, and another 10% in quarterly, semi-annual, or annual installments. This facilitates 100% of the appraisal, covering the remaining total value, except:

• The documented legal acts tax (AJD)
• The value-added tax (VAT) which is 10% for new properties and 4% for protected properties.

Why choose a new construction home?

Buying a new construction home is an excellent option for both the present and the future. It stand out in the real estate market for the following reasons:

• Energy efficiency
• Flexible payment options
• Investment security
• Customization possibilities
• Exceptional common areas
• Ready to move in without renovations
• Favorable financing conditions
• Ten-year warranty from the builder

& much more!

Discover our new construction home promotions

At KM2 Real Estate Services, we specialize in marketing new construction properties in the best areas of Barcelona and Madrid. With over 45 years of experience, we offer each of our clients a professional, reliable, and efficient process.

Want to see them all? We invite you to visit our “new construction” section on our website or click here.

We are ready to help you find your dream home. Don’t hesitate to contact our real estate agencies for more information.