mortgage let down

Wondered if anyone else has been in this situation?  Sure they have.

Almost due to complete on purchase of apartment in Mallorca.  For past year bank (Santander) assured me best way was to find property at good price with higher valuation to secure funds I needed.  In bank 2 weeks ago, and over phone call to Madrid again assured of 60% of valuation price.  Now, at last minute told only 60% of purchase price.  one 70,000. one 140,000 so big difference. Took the risk and as family connection, have already refurbed and paid out on apartment, so don't want to lose out on this but massive shortfall now.  Lots of websites still say put valuation price to lender to get maximum funds, but are banks not doing LTV anymore.  Is it just purchase.  Anyone got round this a different way?  Very frustrating, as income no problem to cover this mortgage (as bank agree).

Jane 

Hi Jane,

Very few lenders are now doing LTV, with most looking at the lower of valuation or purchase price.  There are still a couple of lenders offering against LTV and rate margins are from +1.4 - +2 over annual Euribor, depending on if you are looking for an Interest Only element.   Have you had a valuation done IRO €235k?   it is possible that an alternative lender may accept this, saving on further valuation fees!

If you prefer to stay with Santander is it an option for you fund the difference from the UK, e.g. against your property?

You should still be able to achieve upto 70% of lower of value or purchase price if this would help?

Hi Jane.

Sorry I am coming in on this one relatively late!

There are lenders that are still comparatively aggressive in comparison to what you have been offered.

For example, one offers 60% LTV BUT no more than 90% of the Contract price (LTC).

Or another, 70% LTV with 80% LTC.

Mortgages based on valuation alone have gone by the by now!

Regards

Mark M

Hi All

As we seem to have some level headed financial people connected to this thread , can somebody answer my question please.

Have just been offered a property in a apart-hotel complex, have the 30% Deposit of original valuation,  what is the Banks view on Mortgages for these properties?

Or will they only lend on Todays valuation

Can I still get interest only Mortgage in Spain?

Thanks Tony

Hi Tony,

Banks will lend on todays market trend if LTV, max 60% other than that you are looking at a max 70% of the lower contract purchase price / valuation.    Not sure what stage you are at but look out for the IVA at possibly 16% as apart-hotels can be deemed to be commercial.   Some banks will not entertain these properties, for the very same reason. 

Interest Only is available;   up to 5 years, depending on lender - for these property types.

Tony

location is also coming into play, as some lenders are not keen on certain areas this is due to their current mortgage book being potentially "overbalanced" re risk status of potential /possible defaulters.

Your choice of lenders is also limited thus allowing them to incorporate alrger costs etc

My main concerns with aparthotels which we have looked at both abroad and in the UK for investors / pension trustees are

a) what percentage of the hotel rooms has or is to be sold-as if it were say only 70% surely the hotel will want to rent out its 30% first and formost (so you need to see the rental contract prior to purchasing)

b) ongoing maintenance costs -as much like timeshare years ago the maintenace costs could exceed the rental yield.

good luck

I would agree with Advisor on this one!

In this market of all markets, i) I would tend to steer clear of any property where I cannot control my own destiny (costs, ownership) and ii) arranging financing is going to be difficult, especially at the higher end of Loan To Value.

Ditto - significant risk element with Aparthotels - and generally lenders dont like them which should tell you a great deal