Kingo

Hi Folks.

             Need some advice please. Do you have to take out a spanish mortgage ? We are thinking of remortgageing our home in the UK to pay  for our spanish home.

 

John.

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Hi John,  no you do not have to take out a Spanish mortgage.  We have taken out a mortgage on the home in UK, we had finished paying for it, we was going to do equity release but  we had some advice and did not go down that road.  Hope this helps Pat  

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My advice is to always get a mortgage from a Spanish bank even if you have all the cash sitting in your account. The reason I say this is because of the old saying "buyer beware". There have been so many people who have lost their homes in Spain due to them not getting thorough checks done by their solicitor. They release money from the UK and get off the plane in Spain with a wallet full of cash. They then go and buy a place with cash. This is a BIG mistake. A spanish bank will perform very rigorous checks before they lend yoy any money and if after all these checks they are happy to give you a mortgage then you can be pretty sure that the place is legit. After that, you can pay the mortgage off within a few years as long as you've gone for a mortgage with no early pay penalty.

I have gone even more cautious. I have an interest free mortgage!!! yes its true... what I've done is put the money that I would have paid the mortgage off with, into Income Bonds in the UK. The monthly income pays the interest on the mortgage, so I dont have to and in the event of the house in Spain being a wrong'n, I still got all my money. Brilliant!

Hope my advice helps.

 

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I assume Eva that you mean interest only - dont think there is any mortgage lender anywhere in the world that is yet offering interest free mortgages - if there is I must find them - borrow as much as I can and then lend it to other banks that will pay me interest on the deposits - actually I would probably do something else with it that meant I could earn still more on my borrowed money -

Following on from Evas comments she is absolutely 100% correct that the banks here are more thorough than most lawyers when doing checks on property legality and even if someone were to buy for cash it is probably to be recommended that they have a bank valuation done anyway as that will ensure it is fully legal and licensed correctly - bear in mind it is still a buyer beware situation here and there will be many people that have had poor legal representation (on this forum) with no recourse against their lawyer when they have discovered their mistake retrospectively. A mortgage here can also reduce potential long term tax liability - depends on your situation of course - in terms of IHT and wealth tax.

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Hi Smiley, no what I meant by an interest free mortgage is this.

My Spanish mortgage is a repayment mortgage for 50,000 euros (about £40k), costing me about 350 euros a month.  I have the money to pay the mortgage off in full but instead of giving it all to the Spanish bank and leaving me potless and also having all my money tied up in a Spanish house, I have put the money into Income Bonds in the UK. The monthly income I get each month is automatically transferred to my Spanish account to make the mortgge payment every month, so in essence, the mortgage in Spain is interest free as it is paid for by the interest gained in the UK. This means that I still have all my money safe in Bonds incase anything should happen in Spain, and eventually, the mortgage term will run out (25 years) still leaving me all the cash.

 

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So it isnt actually an interest free mortgage then. The Spanish lender is still charging you interest but your money invested is at least keeping track with the interest charge on the Spanish loan  - or possibly more than. I understand the concept (and great idea it is too) but one needs to have the funds in the first place to invest into the bond or elsewhere so not everybodys solution.

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absolutely, the choice is only there if you are thinking of paying off your mortgage or as this thread started, buying a place with cash or getting a mortgage.

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Think it actually started with should they remortgage their house in the UK or did they have to take out a Spanish mortgage????

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actually, if you read my post, I was giving my advice as to whether its a good idea to get a mortgage in Spain or not, the last bit was just a bit of extra info I provided.

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Actually I did read your post and made the comment that you were 100% correct that the banks here are more thorough in their checks.

Regarding what a buyer can do and also whether it is good advice does depend on their own situation and you are fortunate that you were not compelled to borrow to complete but chose to manage your own capital in a way that suited you and raise a Spanish mortgage and not tie up your own money in the Spanish property. I merely made the remark that not everybody can do that as they dont all have the funds available and the start of the thread asked the question did they have to get a Spanish mortgage or could they arrange a remortgage on their UK property .

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