Financing Developer Instalments Spain: how it works
No Spanish bank finances the instalments during construction. Anyone who owns largely unencumbered property in Germany still has a route — it simply runs through a different legal system.
Author & regulatory separation. Content author: Siegfried Perini. Mortgage brokerage in Spain and Portugal is carried out under the §34i GewO licence held by Olga Nikushkina — BAFA-notified for Spain, in Portugal through a locally licensed intermediary. This information does not replace legal or tax advice.
How do I finance the instalments to a Spanish developer?
Through security held outside Spain. If you own a largely unencumbered property in Germany, you can raise up to 80 per cent of its lending value; those funds carry no restriction on use and can cover the developer instalments. The benefit goes beyond liquidity: the Spanish property stays free of charges, so you appear as a cash buyer in Spain and negotiate accordingly. The second route applies if you already own in Spain — borrowing up to 50 per cent of the tasación, conditional on the property being unencumbered, with the funds demonstrably going into the next Spanish property. Both routes need lead time, because two legal systems are involved and the German charge and the Spanish purchase contract do not run to the same clock. Starting only after the private contract is signed means negotiating under pressure. The order matters: the funding structure comes first, the payment schedule second.
The capital exists — it is just not liquid
The typical case: a couple in their mid-fifties, the German home paid off or nearly so, a new-build on the Costa Blanca reserved, and a payment plan demanding six-figure instalments over the next 24 months. The wealth is there — it is in bricks, not in the account.
A Spanish bank cannot help here: it lends against the Spanish property, and that does not yet exist. A German bank will not finance the Spanish holiday property directly either — it neither can nor wants to hold a charge in a foreign land register.
German security, unrestricted use of funds
What a German bank can do: a mortgage-secured loan against the German property. The security sits in Germany, the law is German law, the land register is the familiar one. What the borrower does with the money is their own affair.
That makes the Spanish developer instalments payable — not as "Spanish financing" but as raising capital against German assets. The distinction is not cosmetic: it decides whether a bank takes the case at all.
At completion, two paths remain open: the balance is covered by a Spanish mortgage while the German facility continues alongside — or, where the valuation supports it, the whole purchase is carried by the German security. Which is sensible depends on loan-to-value, the term you want and your income.
When this route holds
- German property with sufficient free lending headroom — not necessarily unencumbered, but not fully drawn either.
- Income that carries both: the German facility during the build and the Spanish instalment later.
- A realistic timeline. Construction takes 18 to 36 months. The fixed-rate period should match — not fall short of it.
- A sound developer contract with secured instalments. Money paid into an unsecured project turns the German facility into risk without cover. See aval bancario & seguro de caución.
Where this does not work
Without property in Germany, this bridge does not exist. What remains is own funds, a later entry (buying a completed new-build unit) or doing without off-plan. That is unwelcome, but more honest than a financing promise nobody can keep.
Equally: two parallel loans mean two instalments. The burden during the construction phase must be bearable — including if completion slips by six or twelve months. Delays in Spain are not the exception.
Frequently asked questions
Is the Spanish property charged in the process?
Does the German property have to be unencumbered?
Is this foreign-property financing?
Who handles a case like this?
More on the construction phase
Checklist: what must be checked before the first instalment
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Checklist: what must be checked before the first instalment →Why Spanish banks do not finance the construction phase
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Why Spanish banks do not finance the construction phase →Subrogación: take over the developer's mortgage, or redeem it?
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Subrogación: take over the developer's mortgage, or redeem it? →Hipoteca de autopromotor: self-building in Spain
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Hipoteca de autopromotor: self-building in Spain →New-build in Spain — let us work through the construction phase together
I check which part of the price has to come from your own funds, what a German bank can raise against existing property, and what the Spanish bank takes on at completion — free of charge, no upfront cost.