Mortgages

We are taking out a 'builder's morgage' with the Banco Santander and as you say belwo, they are keeping the valuation the same as the originally agreed purchase price. The rate is 12 mth euribor plus .75% which seems a good deal. The fees are slightly lower aswell. That said, we have had an agreement by email, but haven't yet had all the final paperwork through, so we could find out there are a few 'gotchas' when we see all the detail.

Depending on the Loan to Value, Euribor +0.75 is competitive. Usually builders mortgages are about 60% and at the moment, at 60% anyting below E+1% is good.

I would be interested to find out how much they would charge if you wanted more.....

I was fortunate enough by pure co-incidence to play a round of golf with the local La Caixa bank manager in Roda a couple of weeks ago. He was quite honest and said the best deal is to take the builders mortgage, as the savings are roughly around €5k and the other repayment rates are more or less the same with any bank.

I then contacted the builers bank (Santander as Thedts said below), and they were also offering the E + 0.75 rate, which is very competitive. I also asked if the 70% of valuation was fixed and if I could borrow 80% and include the cost of air-con, and the lady explained it is always negotiable upwards, but depends on your salary and factors like that. She also said the valuation is the same as when we bought it , so at least we wouldn't lose out by potential drops in value. Roughly speaking, currently on a 70% purchase price of 250K the bank said that repayments over 25 years of 180K work out around €820 a month.

On a related point, I asked the La Caixa banker during the round if there was a 3.0% minimum variable rate, and he said there usually is, however it is also usually includes a 6.0% maximum rate, so although it might seem slightly dearer than the E + 0.75% now, it is also in someway fixed to a maximum in case the interest rates go through the roof in a few years time again.

Hi everyone,

I am confused now.

I understood the Developers Mortgage is with CAM bank, but a number of you seem t be talking about Santander?

Is the Builders mortgage different from the Developers mortgage?

Sorry if this is a stupid question.

Hi All,

The maximum rate or 'ceiling' is in the main set at 12% - we only have to look at the second half of last year when the base rate was well over 5% and added to that the margin would in turn take the rate over the 6% mark!  in fact earlier this year La Caixa were offering a first year rate at 6.95% then annual Euribor + 1.75!

There are no two ways about it, subrogating the developers mortgage does allow for up front savings as the mortgage costs have already been paid, and using the example of 180K€ the savings are more likely to be IRO 4K€.   Sometimes the hefty Life Assurance premiums outweighs some of these savings!  Euribor + 0.75 is an amazingly good deal in the current maket and this kind of margin is normally reserved for those that take out numerous extra bank products.  Not sure if that is the case here but in comparison one lender is offering 50% at annual Euribor + 0.9 and another at 60% offering first year at 2.5% then annual Euribor + 1 both no extra products required.

The developer mortgage is definately worth considering, should you meet the lender criteria but also to consider is if the product is right for you e.g. a longer term, Interest Only Period, redemption penalties etc.    In essence the important thing is choosing the right product that suits your needs and you feel will do so for the life of the loan; remortgaging costs are high at approx 5-6%!

Just a quick reply to Carrington. Different phases and even different blocks were guaranteed by different banks. When I was playing the round of golf with the La Caixa bank manager I was hoping we were in his guaranteed area, but unfortunately we weren't.

He was still honest enough to advise me not to apply at his bank as he suggested the Builders mortgage covering us (Menta Ph II) was a better deal.

Apologies for a slightly misleading comment earlier, but our builders mortgage is with Banco Valencia, and not Santander as I stated. The rest of the mails details are correct.

Does anyone know what the Early Repayment Charges (ERC's) might be on some of the mortgage offers?

Just being a little optimistic for the future !

Santander is 0.5% charge payable for early redemption for the first five years, 0.25% thereafter.

Hi Warren,

Thank you.

That gives us some idea of what might be included at a later date.

Anyone been contacted by Capital Finance? They seem to be offering some good deals on the face of it. They say they can guarantee a 70% mortgage with  5 year interest only and rate of Euribor plus 1.3% (much better than CAM but not so good as some of the developer's banks).

Trevor

www.corveragolfapartment.co.uk