Remortgaging a property in Spain - advice please

Hi folks

I currently own a villa in the Alicante region with my ex-wife.  I am looking to remortgage to release equity for the divorce settlement.  I have a small mortgage on the villa at this moment in time which can be paid off if necessary.

My bank (LaCaixa) is looking for a fee of 14% to undertake the remortgaging and facilitate the equity release which I find quite astonishing!!

Can anyone give me recommendations on banks and/or mortgage advisors to speak to with a view to remortgaging through them at a more sensible cost?!!

Regards

Mike

Hi,

It is almost impossible to remortgage your property in Spain.

There are only 2 Banks who would consider and only for "divorse" cases, one of which is La Caixa Bank.

I would get back to them and ask for a breakdown of cost. I am guessing that it is partly for Mortagage Tax or Property Tax which you might have to pay again if the ownership is changing. I am not an expert on property law but it seems a lot.

Usually Banks charge a fee of about 1-2% of the mortagage amount.

Good Luck

Mike

I suspect the 14% fee which you mention may be to cover all the expenses involved.  

Finding another bank may not affect those charges. 

As  Boz suggests you may need to talk to your bank for get a breakdown of the charges.

If your wife will cease to be a part owner, then that will require paperwork, including revising the Property Registry records, taking her off, modifying the info re the existing loan and substituting the new details and showing you as the 100% owner etc.   The charges and probable taxes for doing that, all of which will include bank lawyers and notary can be pretty high. 

My son paid off a mortgage after a couple of years but he has still not altered the Property Registry Records as at the time he was not interested in doing anything with the property other than keep it.  The Registry Office charges would have high and he would also have had to pay the legal fees of the bank.  He is hoping that when the time comes, when  he want to sell,  that the charges will have become more reasonable. .

First of all it isn't impossible to remortgage, just as you have discovered expensive

If the property is in both names, strictly speaking here you are actually selling the property and buying it agiain in you name so you are having to repay everything, including proerty transfer tax and Notary fees, giving you the 14%

Thanks for taking the time to reply folks. 

OK, I understand the high fees now (don't agree with them but then what is Spain without excessive bureaucracy?!)

Regards

Msim

 Maybe instead of calling it ‘re-mortgaging’  you looked at your property as an asset against which you could raise a loan.   You say you have only a small mortgage so you will have rcentage of equity in the property which should ensure your ability to raise a loan.

About 20 years ago when interest rates were good I made a few short term loans secured as second charges on properties which had mortgages.  The paperwork was done by a notary and the loans were recorded as second charges on the properties in the Property Registry.

It maybe that your bank or another would look favourably on a loan.

I do not know your circumstances but if might be that you and your wife could agree to keep the property in both names but with the understanding that most, or all of that asset was in reality yours.   That would avoid taxes Inspector and I mentioned.. 

Just a thought,

This message was last edited by johnzx on 15/01/2017.

Maria,

How would you handle this?

I tried to put myself in the lender's position, asking how would I make any money out of this? No lender worth their salt would put themselves in a 'pig in the middle' position with ex spouses on either side of them.

🤔

Msim 

I have just sent you a PM, albeit that I might be breaking some unwritten rule,

Hi,

I would ask your bank for a written breakdown of the 14%.

If you are, as most people are, joint 50/50 owners, you should only have to pay the transfer tax on half of the equity. As the property is in Alicante the transfer tax is 10%, so in theory the transfer of equity should be 5%?

As pointed out you will need the services of a notary and the land registry will require updating, both chargable events. I would suggest that if you kept the loan with your existing lender and asked for a deed of "amplificacion" you could avoid any early cancellation fees from your current bank, and you would only have to pay mortgage tax on the new portion of the loan. Any bank arrangement fees, would again only be on the new part. 

I would be surprised if the whole event cost more than 7-8% incl transfer of equity but this is Spain. 

We closed and hid the other thread because it went off topic and became just silly childish comments, as well as picking people up on spelling mistakes which is the quickest way to take a thread of course. Please don't do it. We have unlocked this thread so please keep it on thread and avoid antagonising and provocative comments.

thanks

I would ask the Bank for a breakdown of those costs and of course will also start looking at other entities.

Sentence 705/2015 of December 23rd of the Supreme Court declared abusive the clause in which BBVA imposed on the borrower the payment of all expenses, taxes and commissions derived from the mortgage loan

* Notary's Invoices

* Land Registrar´s invoices

* Registration costs (Gestoría) expenses

* Property Valuation costs

* Attached abusive insurance costs (Life insurance, Mortgage repayment Insurance)

* Commissions on lack of payments

* Mortgage cancellation costs and commissions

* Any judicial or extrajudicial cost which has been charged automatically on the consumer, not following the perceptive rules of the Civil Procedure Act.

This lady never lets this forum down, cheers Maria. 😊

For sure Destry it is so much better to take notice of Law educated people like Maria......

As opposed to lesser known barrack room lawyers.

OK, so it turns out I am literally buying my ex-wifes 50% of the property which is therefore subject to 10% purchase tax (even though we paid this on initial purchase of the villa).  The 4% is for deeds management, land registry and notary costs.

Money for old rope.

So, I was right, you are being asked to pay 14% on 50%? Makes sense, even if it is somewhat frustrating.

Maybe Maria will advise if you could purchase the ex-wifes 50% using a private contract and have her remain on the deeds. Then you would only have to pay the setup costs for the new portion of the mortgage. I have seen similar done before, back in teh days when things were much easier!

The private contract would never get executed in front of a notary.