Blogs and advice from Industry leading Specialists
Valuable Opinions, Comments & Gossip
Financial related News & Articles relating to Spain
Latest News, Stories
& Hot Topics
Various Tools & Widgets to help with your financial needs
Tools & Widgets to
help with finances
Polls, Surveys and Opinions featured throughout Tumbit
Featured Polls, Surveys & Stats
Discussions, Advice & Topical Chat
Discussions, Advice & Topical Chat

Lifetime Loans & Equity Release

- Updated: 01/01/2017

What is a "Lifetime Loan" and am I eleigible to apply for one ?

Lifetime Loans & Equity Release

What are they?

A lifetime loan runs for the rest of your life and is a simple way to release equity from the property that you own in Spain, or in the UK.

With so many different financial options to make your choice from on the market, chosing the right product for you can be a bit of a minefield!

So how do you make sure you retain your financial security whilst enjoying the benefits of the money that is tied up in your equity?

Complicated? Not really, we have identified just a few of the decisions that you should be aware of before embarking on this particular kind of service...

  • No income proof required
  • Paid to you as a lump sun
  • You retain full ownership of your property
  • "No negative equity guarantee" provided
  • The highest loan to valuation ratio available in Spain
  • No further monthly payments required to be made
  • You are not required to make any investments

If 60 or over, these plans allow you to borrow a percentage of your Spanish Property value without having to make any monthly payments of interest or repayments of the loan. Each year interest is added to the loan and also to any interest that has previously been added.

Unlike a conventional mortgage there is usually no set repayment date. The loan becomes repayable on the sale of the property, when the last applicant dies or moves into long-term care and therefore has no use for it. The amount repayable will include all the interest that has been added. If the loan is repaid for any other reason, an additional early repayment charge may be payable. If there is excess equity upon death this will be returned to your estate once your account is settled.

The amount you can borrow is calculated from your age(s) and the value of your property. The younger you are, the longer the Loan period will be in effect and the higher the risk that it could erode all of your equity. Because of this, the plan providers usually only allow younger applicants to borrow a smaller percentage of their property value. We only recommend plans with a "no negative equity guarantee" therefore your debt can never exceed the value of the property.

Although a mortgage with no monthly payments can appear attractive, the total loan with rolled-up interest can increase rapidly, especially after a number of years. It's easy to assume that house prices will continue to increase each year, but there is no guarantee of this.

In effect, a roll-up mortgage is a race between how much the total loan increases to each year, compared with how much your property is worth each year. The difference is the amount you, or your estate, will receive when your loan is finally repaid. If the Spanish Lifetime Mortgage is as much or more than the value of your property, there will no longer be any value for you or your family to benefit from.

Bear in mind that the longer you live, the more interest that will have to be repaid.

The Reality :

Since 2007 it has become extremely difficult to obtain an Equity Release of capital against a Spanish property.

However, it may be possible that a client of a Banking institution with a good history and relationship could release funds against their property if they are to re-invested in Spain (another property, a business, etc.)

Even if this is the case, it would be highly unlikely that the Bank would finance 100% of any such new investment, regardless of it's value.

The Short Answer :

There is currently no Equity Release product widely and commonly available in Spain, however you may find smaller independent lenders may find a private investor willing to enter into a private agreement. Needless to say, the terms are hardly likely to be stacked in your favour.

The best solution is simply this : Assuming you have a good credit history here in Spain, and a good relationship with your Bank, speak with your Bank Manager to explore your options.

Until Spanish Banks once again embrace the concept of Equity Release and Lifetime Loans, it is looking increasingly likely that the product will remain on the fringes of the industry and only offered by a small number of private brokers.

Tumbit always recommend that equity release and Lifetime loans are discussed in depth with your family and Lawyers before making any final decision.

Comment on this Article

I live in Torrevieaja Costa Blanca and I am interested in taking out the equity in my home. Any advice and help you can give me would be appreciated. I would like the name of any bank or company that provide this service. Tina Wells
Tina Wells - Sat 12th Jan 2019
Hi I am 74 and own my own House In Spain - No Mortgage - House value 350000 Euro My wife recently passed away and to stay In our house I must release money from the House via Equirty or re mortgage which Is my best Option If any and who do I approach Thank You
Peter Smith - Fri 23rd Nov 2018
Very helpful advice advice : just - and what I was looking for - Disappointed to learn that equity release is not a widely accepted concept in Spain !
John Sandner - Wed 21st Nov 2018
Hi, I am 71 and my wife is 59 we have a house mortgage free worth 200,000. Would equity release be available to me. Regards Andy
Andy Lowe - Thu 8th Oct 2015
I am 61 years old and own a house in Spain Murcia that cost on paper (escatura) 155,000 Euros and I have a mortgage on it repayment for 30,000 how much could I release please and how long does it take.
Graham Lord - Mon 24th Nov 2014
I am 70 years old my wife is 68 - our Mallorcan Finca is valued at 500,000 euros and is mortgage free - how much could we obtain on equity release ?
Mike Butcher - Fri 24th Oct 2014
Hi, I am 62 years old and own a property in Spain valued at 250,000 euros. I have a mortgage of 90,000 euros, could you advise me as to what options are open to me regarding equity release on my property. Regards Patricia.
Patricia Mc Donnell - Thu 23rd Oct 2014
I am 62 years old and own rosaleas5 hondon de las nieves jointly with my wife .The property is valued at 160000euros and is subject to a mortgage of 65000euros. Would an equity release or lifetime mortgage be available to us ?.Look forward to hearing from you.
Robert Williams - Fri 25th Jul 2014
We are both over 65 and live in Spain and own our own property and was wondering if equity release is available ?
Sheila Stevens - Wed 20th Nov 2013
Marylyn : Over recent years - certainly since Spanish Banks have been under the EU's spotlight - Many lenders have suspended their offer of this kind of product. You 'might' get lucky, but this would depend on the total value of equity in your property and your age.
Tumbit - Admin - Sun 20th Jan 2013
Hi, I live in Spain and own my property and I was wondering if equity release is available ?
Marylyn - Sun 20th Jan 2013
Both aged 65,property worth 90,000 euros could we get a lifetime loan or do equity release if so what percentage ? Thank you in advance
Patricia King - Mon 29th Oct 2012
If the property that you are looking to borrow against is in the UK AND you are UK Residents, then you may be able to do this given that one of you is under 60. If, however, the property is in Spain AND owned in joint names, then you will be unable to do this as BOTH PARTIES are required to be over 60 years of age.

However, you may be eligible to remortgage your property in order to raise funds OR apply for a Personal Secured Loan (Click HERE for more details )

Tumbit - Admin - Fri 27th May 2011
we are looking to raise some cash to start a business, we own outright a property we do not live in, would equity release or other work for this. my husband is over 60 but i am not
Alison Walker - Fri 27th May 2011
we have no morgage on our villa.we wanted to take equity release but we understand we both have to be 65 years old.we have been reading about lifetime loans.I am 64 and my wife is 61 next birthday do you think this would be a better proposal for us.our villa is worth approx 140 .000 euros.looking forward to hearing from you.
Mr Mrs Tomlin - Wed 8th Dec 2010