julie22

Hi Everyone
We live in Spain and have purchased a new build property, finally complete, after 4 years of waiting (we have been living in an apartment we own). We have paid 90 per cent of the purchase price in cash, but typically I have now decided I want to undertake some alterations and also need to complete the outside of the property.

My query is this, we need around 30,000 euros (which is the balance of the property), if we paid the balance of the property this would leave us with little capital in the bank,

We dont want to sell our apartment, we still love it, and can easily rent it out during the summer months. This was also intended as our financial nest egg, which we would cash in much later in life.

Our choice therefore is

Pay full in cash for the villa, and make limited changes, until we either sell the apartment or wait, 10 years, until I get my Teachers Pension!!

Obtain a mortage to pay off the 10% outstanding on the new build, 30,000 euros, if possible on a 10 year interest only basis, leaving us sufficient money in the bank to do all the alterations.

As we now have limited income (1,200 euros), OH thinks we should not have any debt, and live within our means. My view has always been, you only live once, and I would rather die in debt than wealthy.

Views please, and any advice on Spanish banks that offer interest only deals.

wheatsheaf42

If you get a mortgage, interest only or not, you will still have to make monthly payments out of your income.If you don't you would be in danger of being repossessed- and the property sold at a dismal price. You might be Ok to die in debt but where would that leave hubby?

Mitzyboy

With two properties I guess you must be knocking on the door of wealth tax ..... a mortgage can be a deductable for tax purposes

julie22

Thank you for advice, didnt know you could offset a mortage against wealth tax so a good point to consider. Our main worry is still whether we should get ourselves in debt (although to me it seems a small debt) when for the first time in our lives we are debt free!!!

In England we had two very good salaries, so lived like most people obtaining loans for things and then paying them off quickly. Can understand OH point of view where we now have only a relatively small monthly income for the next 10 years until we receive other private pensions and state pensions, and would hate to be in a position where we would have to go back to work.

However, I still feel we should go for it, on the basis of you only live once, and 10 years is a long time to wait. But then I worry whether I am still thinking in English mode of buy now pay later, but with not the salary to do it.

Any advice on interest free mortages over here would be most helpful

Mitzyboy

Also at 1200 euros income you will probably pay no income tax in Spain as you fall into the allowances, although of course income from your second property will be taken into account.

julie22

We do pay income tax unfortunately to the English Goverment, pension is taxed at source as it is civil service pension, really annoys my husband, who is Spanish, now lives in Spain, but still has to pay tax to the English Government!!!

Mitzyboy

Ahhh yes, my wife will be in the same situation, a Civil Service Pension she will pay tax on in the UK, and a state pension that will (not) be taxed in Spain .... how daft is that!!