Mortgages

Does anyone understand Spanish Mortgages? Where I live, it's relatively easy to remortgage or change your mortgage provider, a small amount of legal and Bob's your uncle. In Spain it seems you buy a new property with the mortgage attached and you can never seem to change either the mortgage or the provider without paying IVA? What's the real story?

Thanks   

Hi Katie hopefully I understand mortgages here: Hugely different to the UK. It is not compulsory to take over the existing mortgage on any property whether brand new or resale. A great many mortgage lenders in Spain will permit transferring an existing mortgage to a new owner unlike the UK where you can port your mortgage to a new property but not the other way round.

It is possible to remortgage to a new lender, although it is neither as straightforward nor as cheap as the UK. Typically one needs to allow 5 to 6% of the mortgage value to cover remortgage expenses. Thus if you have a mortgage of 100,000 you need to allow another 5 to 6,000 on top of that. It is not IVA or Transfer Tax as they only relate to the property purchase. However there is a Mortgage Deed Stamp Duty, Notary Fees, Land Registry, Legal, bank charges etc. Hence it is really important for people to ensure they get the right mortgage product when they buy the property at the outset.

As a broker in the UK probably 80% of my business was remortgage. In Spain a very different kettle of fish - the cost factor puts many people off. This can be covered within the loan but the main question I would have is why do you want to change the mortgage and then it is a question of what is best advice and does the cost justify the switch.

Regards