Steve

Hi ,I have a mortgage with La caixa bank and when i took it out 3 yrs ago i had to have life insurance.The person dealing with my mortgage then told me after 12 months i can cancel it as it is needed to initially get the mortgage.After 3 yrs they have told me i cannot cancel as it is needed throughout the term.My problem is the price.They are charging me at first 125 eur per month but after arguing with them they have dropped it to 99 eur pmonth.I am 53 yrs old and has anyone have this problem or can advise how to go about cancelling it as it is such a large amount

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Hi Stewal,

Did you take this the mortgage out via a broker?

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125€ a month seems high (even 99 seems high) even at age 53 and even for a lenders in house policy but I do not know whether they are underwriting any previous health conditions.

The problem with mortgages in Spain is that they are not regulated so the lenders do not have to tell you anything in advance - it is when you arrive at the Notary to complete that suddenly these little things are thrown in to the equation. You are at the Notary to complete and they tell you that you cannot without the life cover. While it would be expensive to remortgage in Spain it might be worth considering as the expense might be outweighed by the fact that you would be saving 1200€ a year in life premiums.  

It might be worth asking La Caixa if they will accept a policy from an independent as long as it provides the same cover. You might need to be assertive with them as they will be earning a good commission from the policy and will not want to cancel it. If you stamp your feet a little and tell them you are considering remortgaging to another lender they might be willing to roll over. I dont know but worth a try. A lot of them work on the basis you are buying in a strange land with a foreign language so wont take them to task the way a local would do.

The fact that they have reduced it to 99 from 125 is a significant drop in premium. It seems to me almost as if they have thought of a number, doubled it added 25 and that is the premium. In the UK that just wouldnt happen.  The premium is the premium and unless it was in a market where life premiums were dropping generally owing to a re-appraisal of risk (such as HIV/AIDS no longer seen as an immediate death warrant and it not having reached epidemic proportions in the western world the way it was perceived in the early 80's).

Hope that helps

Smiley

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Is it possible then to take out a mortgage in Spain without life insurance or is this compulsory?

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Hi Stephen thanks for the PM and you're welcome. Life Cover is not compulsory with a mortgage in Spain but it depends on the lender - some of them insist on it.

 

Regards Smiley

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If M Briggs reads this message can he or she PM me with an e mail address if they want an answer. I tried to reply to the PM through the secure method but for some reason it would not go through.

Regards Smiley

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Does anyone know what the current interest rate is on spanish mortgages

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Hi Tricky depends on what you want. Fixed rates are available in Spain but always higher than variable rates. Most lenders work in conjunction with a benchmark that is known as EURIBOR (European Inter Bank Offered Rate). The rate at which prime banks will lend money to other prime banks. Depending on product the chargeable rate can be anything between EURIBOR plus 0.75% and EURIBOR plus 2%. Annual EURIBOR is currently 3.79% - monthly EURIBOR is 3.58%. There is another benchmark called IRPH which is an internal Spanish mortgage rate but this is not so widely used.

Rgds 

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