Good day,
We want to purchase a property in Ireland as a holiday home for our own use and optionally to rent out.
However, financing is much more complicated than we would have expected.
After some back and forth, we found an Irish bank that would finance it, but would rule out renting. But we would at least like to keep the option.
We then looked at loans for general use, as we would have accepted the worse conditions if in doubt, as the amount (140k) and term (10 years) would have been manageable.
However, we discovered that while you can buy any kind of nonsense with loans for free use, you cannot buy land or real estate. These are the only things that are excluded from the loan terms at every bank.
Why is it not clear to us (perhaps because of possible follow-up costs?!) who has the background to this? That would be interesting purely out of interest.
Now to the actual question: does anyone have any tips on how to get the financing done?
Framework data (EUR):
Property value:210,000
Equity: 70,000 (another 10-15k for additional costs)
Desired external capital: 140,000
Borrowers: both spouses
Income: 5,000 + 4,600 net = 9,600 total (fixed, plus bonuses).
Existing real estate: a house (600k market value, 240k remaining debt), an apartment (160k market value, no remaining debt, but usufruct on it)
We have read that German banks sometimes give loans for foreign real estate if you can provide a paid-off property as collateral.
In our case, that would only be the apartment, but because of the usufruct (of the mother), this is of little use as security. Perhaps the mother would agree to the use as security. However, I don’t know how that would be structured contractually.
