Building your own house is an alternative that is slowly gaining momentum. On the one hand, there are many areas in Spain where real estate market is very tense, with high prices and difficulties in finding property. On the other hand, prefab house format is becoming more and more affordable, which allows you to get a house quickly, more economically and even more energy and environmentally efficient.
This growth is partially supported by the existence of specialized financing - self-construction mortgages.
What makes a self-construction mortgage loan different from other mortgage loans?
The main difference between a self-construction mortgage from other loans with a mortgage guarantee, which the consumer concludes, lies precisely in the different nature of the guarantee, and therefore the risk that the bank which provides it assumes.
When we buy a house and take out a mortgage to finance it, this guarantee is given to the property already built and therefore, if the property is foreclosed by a financial institution in the event of non-payment, it will receive a property that it can relatively easily sell, except that the price could be lower. In fact, the most common maximum limit for granting a mortgage is 80% of the purchase price or appraised value, so even if the property price drops sharply at the start of the transaction, it can cover the entire debt.
By self-construction mortgage, this is not always the case, since at the beginning of the operation there is a moment when the guarantee is lower, since the property has not yet been built. This poses a greater risk, although not the only one. Many of the self-listing houses are in areas that are not in high demand or are custom built, which makes their selling a little more difficult.
All this affects one of the most important elements - the maximum financing amount, as well as the term, interest rate and even commission.