Mortgage or cash ?

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18 Dec 2016 13:25 by Spanishsteve Star rating in Surrey, Eastbourne &.... 77 posts Send private message

I'm looking at buying a villa in murcia, circa €300k, I have cash but with the exchange rate down since Brexit I am now paying €30k+ more. 

Im wondering if I could get a non resident mortgage and basically pay the mortgage and wait until sterling rate gets better, I appreciate I could be waiting a while. I'm retired (early), and get a reasonable pension and can provide proof of savings nearly double of mortgage required. Will the banks lending criteria allow a mortgage with savings or has it to be income ? Unfortunately I'm not in Spain to enquire with the banks direct. Any ideas please ?





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18 Dec 2016 14:18 by Destry Star rating in MYOB . 264 posts Send private message

Steve,

I wager that if and when the £/€ exchange rate favours you that the villa will have increased in value, so you will have little to lose by having a mortgage, you will have to put a 15% to 20% deposit down and pay all fees and taxes at the current exchange rate, so you won't get away scot free.

I suggest that you use the services of an international mortgage broker who is remunerated by a procuration fee paid to them by the lender.

Good luck with your purchase. 



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18 Dec 2016 15:27 by bobaol Star rating. 2230 posts Send private message

bobaol´s avatar

You could wait a long time before the exchange rate gets better. All depends on the way the Brexit bit goes. You could end up paying even more.

However, it is always best to take out a mortgage, even if it is a small one. The banks will ensure everything is correct and legal before advancing the money and, in Spain, that's always a good thing. We paid cash for our first place and the builders took out a mortgage on the land without telling us. It took us almost 7 years and several court appearances to sort all that out before finally getting the deeds.

Our second place we just took out a mortgage for 20,000 euro. The bank checked everything and even sat in with the notary and contract exchange. We then paid it off after about 6 months (there were no penalties, the charge was nothing for paying part of it off and then 10% of the balance so we made sure we paid it all off less 100 euros and then paid a 10 euro charge on the final payment.) The bank held the deeds until we paid it off and then handed them over to us on the final payment.

 

 

 


This message was last edited by bobaol on 18/12/2016.



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18 Dec 2016 21:59 by tteedd Star rating in Hertfordshire & Punt.... 677 posts Send private message

One advantage of having a mortgage is that you do not own the property so there are no Spanish death duties if you are not resident. (or no death duties on the part mortgaged).
 

 


This message was last edited by tteedd on 18/12/2016.



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19 Dec 2016 12:55 by Destry Star rating in MYOB . 264 posts Send private message

Steve,

Two very good reasons to have a mortgage there.



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IF YOU WISH TO QUOTE ANY OF MY POSTS PLEASE DO SO IN THEIR ENTIRETY AND NOT JUST A FEW SELECTED WORDS TOTALLY OUT OF CONTEXT. THANK YOU.



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19 Dec 2016 14:53 by inspectahomespain Star rating in Orihuela Costa, Spai.... 2229 posts Send private message

Vip Supporter

At the moment there is some real cheap money out there with good rates but you must not ignore the additional costs that are associated with mortgages, which are documented on my own website, even some hidden costs but yiou should expect top add between 2%- 3% to the cost of the purchase

The LTV percentage is typically between 60% - 70% of the value, and this does not include fees, typically around 15% which means on a 60% loan you need 45% of the value as a deposit on 70% you need 55% to put down

If you are considering settling the mortgage early then we have an option on 60% LTV, 10 years at 1.9%

70% LTV fixed at 2.3%

Now here's the thngs to watch out for is when they ask for life and property insurance supplied by the bank

 



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Roy Howitt Independent Property Consultant www.sonrisaproperties.com www.snaggingspain.com WE CAN FIND YOUR DREAM HOME 627 955 748



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19 Dec 2016 16:53 by Spanishsteve Star rating in Surrey, Eastbourne &.... 77 posts Send private message

Inspectahomespain, thanks for your info. Are the banks likely to grant a mortgage based predominantly on savings than income ?





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19 Dec 2016 16:59 by inspectahomespain Star rating in Orihuela Costa, Spai.... 2229 posts Send private message

Vip Supporter

They are unkikely to loan against savings as they calculate their lending rules on different terms and they want t see actual regular income

The way that Spanish Banks access mortgage lending is different to the UK as the amount that they will loan is based on your ACTUAL INCOME & EXPENDITURE and only if this is shown on your tax returns and bank account. Typically, your monthly outgoings on loan and debt payments. including the new loan will need to be less than 35% of your net income.



_______________________
Roy Howitt Independent Property Consultant www.sonrisaproperties.com www.snaggingspain.com WE CAN FIND YOUR DREAM HOME 627 955 748



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19 Dec 2016 19:39 by Spanishsteve Star rating in Surrey, Eastbourne &.... 77 posts Send private message

Thanks Roy, that's what I thought hence the original question. About a year ago I saw my mortgage lender to borrow £20k on top of the mortgage in uk, I had £400k equity in house and £50k in premium bonds but they would not let me borrow the extra money due to new affordability rules which would not take into account bonds, cash in accounts, pension payments due within months. Stupid rules in my opinion. 

Once again thanks for all the advice given.





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19 Dec 2016 20:00 by inspectahomespain Star rating in Orihuela Costa, Spai.... 2229 posts Send private message

Vip Supporter

if you want to speak to a decent broker in Spain please PM or mail me and I can put you in touch, they are going to be better qualified than me to advise

Perhaps another option might be some form of equity release on the existing UK property



_______________________
Roy Howitt Independent Property Consultant www.sonrisaproperties.com www.snaggingspain.com WE CAN FIND YOUR DREAM HOME 627 955 748



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