Promoter mortgage,or Self-Promoter Mortgage, or "Hipoteca Promotor"

THE HOUSE IS NOT BUILT: SITUATION FOR MORTGAGE PURPOSES- SELF PROMOTER MORTGAGE (Hipoteca Promotor o Auto-Promotor)

It is very common that you, as promoter, need to apply for a mortgage to pay the construction of the property. In this case, there is a specific mortgage which is offered by the bank to obtain enough financial to build the property.

This is called: Promoter Mortgage, or Self-Promoter Mortage (Préstamo o Hipoteca Promotor o Auto-Promotor).

The situation is the following: You have the plot, and  an initial idea about the house projected with the architect, and you have now found the builder to make construction. But you need money, and you need to ask for a loan to build the house.

Then you go to your bank and ask for possibilities of financial. After study your personal situation to confirm that you will be a good client to pay off the mortgage payments, then the bank accepts and offer you to lend you the money for the project. But, the bank will not give you the full amount of the construction expenses at the beginning, they will be giving you the funds by steps. Which steps?, the ones derived from the same evolution of the construction.

For example: Imaging that you need 100.000 EUR to complete the works. The bank will give you 20 % to buy the land, and to make the foundations, 20 % when the structure is finished; 30 % when the roof is complete, etc., and the rest when the architect makes the “certification of final works license” or Licencia de Final de Obra.

Your bank will request from your architect, any time a step is finished, to issue a certification confirming that that step is satisfactory complete. Then, you will bring that certification to the bank, and they will lend you the corresponding percentage for that step in relation with the global.

Sometimes, your bank ask you to have the plot on your name before to give you the approval of the mortgage, and to declare the house “on construction” in the land registry. It is because, sometimes, the builder offers you one of the plots which are on his name to you to build there, and the plot keeps in the builder’s name till completion.
So, to give a better guaranty to the bank, they may request to pass the land into your name, and to inform the land registry that a house is being built in that land. If this is the case, then you have to go to the notary, and get the deeds of the land into your name.
With the deeds of the land on your name, you have to go to the land registry together with the Building Project, and the Building License. In this way, the land registry will the house “in construction” over that land.