What's the best deal?

When you're buying your property in Spain you'll want to make sure you get the best deal on your Spanish mortgage.

Use this form to discuss all matters relating to Spanish mortgages.  Post questions or useful information.

My husband and I are looking for a mortage to complete on an apartment in Phase 4 - due for completion Dec.06

Recommendations and fees for set-up, also indicating how long it takes from start to finish would be gratefully appreciated.

At the moment we are looking at easy-mortgage-spain (www.easy-mortgage-spain.com) and Abbey - in UK.

If you arrange the loan with Leeds BS or any other Gibraltar based lender it will be based on purchase price or value whichever is the lower. Many Spanish lenders will base the loan on the valuation figure not the purchase price which in about 80 to 85% of cases is higher than the purchase price. Thus more finance can be arranged. It is true that there is mortgage deed stamp duty at 1.85% of the advance, however the Gibraltar based lenders will charge you additional legal fees on top of their other arrangement fees as they cannot secure on the property in the same way as Spanish lenders as they are outside Spanish borders. They will also register the loan on a UK credit file and probably have tighter criteria than Spanish lenders when assessing income. Rates are availble from EURIBOR plus 0.75% however one can opt for a true variable rate from about 4.42%. This is fully flexible and calculated daily whereby the EURIBOR based products are calculated annually. Fixed rates in Spain are always higher than variable rates unlike the UK.

Rgds

Hi Scooper no it is not the way with all mortgages. With developer finance it is usually done by of a further advance that is incorporated with the deal at the same time. If the end user does not take the devlopers mortgage and opts to take a different product any surplus funds that are arranged are paid into the mortgage borrowers account on the day of completion.

Rgds Smiley

Hi Smiley,

You seem very knowledgable about mortgages, so I'm guessing your in that line of business or maybe an accountant??

Anyway, I'm going to ask your advice...

Myself, husband and another couple are going to Alicante at the end of October to possibly purchase direct from the developer we have been told by them if we require a lawyer they can give us a choice, but I think we're going to be getting our own.

As for the mortgage they have sent us a breakdown of what they can do for us.

We are paying 3000 euros deposit (if we go ahead that is) then 10 percent 8 weeks later then another 10 percent 8 weeks after that, which means we've paid just over 20 per cent.  They have told us that  they can get us the full 80 percent mortgage for the remaining balance on completion and also our 10 percent costs added onto that also, quoting us at the moment the figures are at the 4 percent mark for repayments.

Does this sound a good deal, and is it possible? By the way this is over 30 years and I did state that I am 42 at the moment and would be 44(or near enough!) when the property was completed, thinking about being over 70 at the end of term, and again was told this would not be a problem

I read on another website that if you get a mortgage on principle you can get a clause written in by your lawyer to say that the purchase only goes ahead and completes subject to the mortgage being successful, and if it's not, you would be due all deposits paid back in full.

Sorry it's a bit long winded, but would be grateful, for a little advice.

Thanks

Sharon

Smiley,

We too have been offered to take over the developers mortgage under the following conditions

-        Interest rate: EURIBOR + 1,25% -     Minimum interest rate: 3,25%       -        Term: 15 years   -        Subrogation commission: 0,25% - -        Cancellation commission: 1% --        Commission for transfer to another bank: 0,50%

I need to get the full details via our solicitor, but would value your opinion as you seem knowledgeable on the subject.  I think we would prefer to get  a 25 or 30 year mortgage but need to weigh up the set up fees of the developers mortgage against arranging our own.

Having a knowledge of the spanish mortgage market I read with interest the comments about such,

Developers mortgages - are basically open to any purchaser as the bank involved will be the bank that has lent the funds to the developer to purchase/build they are therefore happy to provide this facility as they are getting back their original loan etc plus further ongoin interest.

Bank /building socity mortgages- discounting the "anglified" lenders such as Abbey /N&P/RBS etc allothers are based on affordability (there is one self certification product available but only for 60% of value) ie they take your income and outgoings (uk mortgage, loans etc and add the cost of the spanish mortgage) to work out your "affordability" ratio by dividing the higher (hopefully income!) by the lower you arrive at a given % if it is 40% or lower no problem if higher it may be acceptable if you are a high earner.

Amounts:

It is still possible to obtain (dependent upon individual circumstances) up to 80% of value -capped at the purchase price-an example being my own property which was purchased at 235,000e valued at 330,000e so a mortgage of  264,000e would be "capped" at the 235,000e purchase price.

Costs and Rates:

Opening fees on all (developer and private) tend to be 1%

Cancellation fees (when selling) tend to be 0.5% on developers but nil on private.

Interest rates tend to be euribor+1.25% on developers but on average euribor +1% on private.

One major advantage:

On private is the ability to have interest only for up to 3 years thus allowing you to "ease" into your new place after suffering all the heavy legal costs etc.

Hope this helps

shaun

Hi Advisor,

Could you read my comments on 16th October and let me know what you think???  This is the only part of purchasing that's bothering me, it's all and well getting told at the moment what the 'plan'  is, I'm just worried that 2 years down the line when it's time to take the actual mortgage that it's not available, then of course you don't have the funds!

What do you also think about getting the clause written in re the mortgage??

Thanks

Hi advisor, to help you expand your knowledge of the Spanish market, it is possible to get up to 15 years interest only at 70% of value and 10 years interest only at 80% of value (with the same constraints relating to purchase price). There are other "self cert" products in Spain as well, not just the 60% product you mention. The 60% product is also not available for any client with more than £10,000 unsecured borrowings including credit cards - rates are not exactly brilliant either, nor the opening commission. If it gets the buyer where they need to go, then so be it but I reckon there are other solutions first.

Rgds Smiley

Hi Advisor,
Maybe an odd (and rather vague) question to ask but you (and others) may have an opinion on this :-

If one had enough funds to pay outright for purchase of a property in Spain, would it be a good idea to do so, or better to take out a mortgage and use one's funds elsewhere ?  My gut feeling is that not having a mortgage is a "good thing" but have a slight worry about tying up capital in an overseas property.

Dave

I am looking to remortage a spanish apt bought two years ago before next march to a long interest only mortage on about 123000 euro

I am currently with solbank but they stop their interest only after two years

I heard that ?Bankinter were doing 30 years interest only a few months ago

Any idea if they still are or something similar for remortgages anywhere else

Any contacts web sites etc helpful

thank you all  

Hi DaveAilsa

Have you thought about using offset accounts in a UK bank? ie, take an interest only mortgage out on your UK home to pay for your overseas property but put your funds into a savings account that 'offsets' your mortgage. You can end up with an interest free mortgage although you will still have repayments every month.

Just a thought.

Hi All

Looking for a recomendation on a repayment mortgage, either through a brooker or direct with a bank.

Can anyone recomend?

Tintin

Hi Smiley

Thanks for your pm - totally agree that it is all down to individual circumstance just thought I'd put the idea forward.

You mentioned that it could be argued that it is better to have a debt in Spain than the UK as there is no spousal exemption for inheritance tax & as such when one partner dies with a mortgage still on the property, only the equity is subject to tax. Question is - if the property is owned free of mortgage is it possible to mitigate any inheritance tax possibility by putting it into childrens names? Just wondered if you knew of any pitfalls with this course of action? (I'm sure there must be some!)

Hi all

Leeds BS in Gibraltar are offering "Interest Only" mortgages up to 30 years or to the age of 75.

IE if aged 50 you can only take it over 25 years.