mortgages

We are moving to spain in the next couple of years we have bought an azucena in jumilla and would like to get a mortgage for the remainder of the balance, can any one advise of a good bank and tell me a little about how things work over there, and roughly how long it takes to go through.

many thanks
jannine

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Mortgages quite different here to the UK. In essence we are about 10 years mas o menos behind the UK in terms of range of products although we are gaining ground fast. The mortgage product you can get depends a lot on your financial circumstances in the UK and your ages, type of property you are buying etc. Not all banks will lend on all types of property. Much depends on whether you apply for the mortgage before you come to Spain or not. As a Spanish resident it is possible to achieve a higher loan to value (less deposit) but you will be required to provide proof of income. If you plan to be self employed ,most lenders will want 2 years accounts and tax returns. If you are coming to work in an employed position then you will require a permanent contract of employment and at least three months payslips (possibly 6). There are many many factors to consider so to give you a black or white answer is impossible on the strength of what you have said but if you want to know more let me know and we can have a more in depth discussion. Generally lenders here are more risk averse (cautious) and hence defaults/repossessions are fewer.

Rgds

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This message was last edited by JeansSis on 5/16/2007.

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Lucky you Janice to have rid yourself of both millstones, but in many respects it can save significant dough here if you do have one. Long time away for you to even consider but IHT for non residents can be quite injurious - a lot can be offset against IHT but if the asset increases in value at a greater rate than the allowances do which has been the record historically it can cost a lot of dough for beneficiaries. As there is no spousal exemption here and a couple are considered tenants in common as opposed to joint tenants as in the UK, on first death there is an immediate liability on 50% of the property value. Also as there is no system of probate, technically the property cannot be sold to pay the duties - they have to be settled first - I believe that there is a system in place whereby the duty can be paid simultaneously at time of property sale. Hopefully this is something that will be looked at by the authorities as we become less and less of a "Third World Country" and the system will be improved - then again this is Spain so dont hold your breath.

Rgds   

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Hi Smiley,

I have heard about this Inheritance Tax before, but given the choice what would you do if you had the funds available to pay it off in full. If it was me, I probably would pay in full for peace of mind, so my overall monthly bills would be lower, and with all those years of interest you are paying, you are only making the banks richer. Surely  the amount of interest you save over the term of the loan knocks a big hole in this IHT bill in comparison. What is the rate of the IHT on the property. Could you give us all a comparison for say a €200,000 property with an outstanding mortgage of €100,000 with say 15 years left on it at  4.5% across the term of the mortgage. How much interest would you save by paying it in full, or if your partner was to die, whhat would the IHT bill be.

Good Luck

Westport (Pearce)

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Total interest would be €37323.80

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Put your €100k in the bank instead of paying off the mortgage and happy days - less IHT and a little income...or just stick it in your pension and get a big fat tax rebate then you beat the tax system twice!!!

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Hi Westport I will try and work out some figures for you. My thread was only to keep people informed and I am not going to suggest it is something that you do. The only person who can decide what is most appropriate is you. In fact if you get David Earles book (or is it David Searle - cant remember mine is at work) there is some good information so you could probably work it out for yourself. Perhaps if we both work out some figures and then I'll show you mine if you show me yours - there's a joke in there somewhere.

I am in the fortunate position that it would not have been necessary for me to have a mortgage to buy my house - I also have three investment properties here with mortgages - for one of them I took out over 100,000€ more than I needed as the interest I am being charged is much less than the capital is making me elsewhere. Nevertheless on my home I have taken a mortgage for a number of reasons all relating to tax efficiency - that is what suited me - whether that suits you is another matter. Then again my attitude to money is about money managment not that I am in debt - hope that makes sense. Additionally my capital is invested where it is earning me more than the interest charges on the mortgage so that would need to be factored into your equation below. A great deal depends on life expectancy too. I do not know your personal circumstances but if I was of the mindset of a non resident with debt aversion with a mortgage in the UK then I would be clearing that significantly quicker than the mortgage here. For two reasons: first generally interest rates are lower in the Eurozone than the UK and second there is no IHT liability between husband and wife. Obviously if there is debt on the property in Spain only the equity in the house is asset. IHT is on a sliding scale and as I said there are allowances - different between non residents and residents. Subject to value of asset held you can also reduce your wealth tax liability. God its too late to be trying to think about this but I think you get the gist of what I am saying. It is down to personal circumstances and long term plans.  

 

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can anyone tell us how long it takes to sort out a morgagewe we have an offer in principal and our solicitor has all relevant proof of income etc

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Depends on the quality of the lending bank and their staff and how straightforward the mortgage application and the people dealing with it. We recommend clients allow 4 to 6 weeks once we have all documents - nevertheless we have had them complete in three.

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Thanks Smiley thats about them time scale our solicitor told us but the sellers agent said there morgage person could do it in 2/3 weeks think it will be easier and less hassle to stay as we are providing the product stays the same.

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