International Mortgages

Hi All,

Wonder if someone could answer something for me, I have been looking at getting a mortgage for a holiday home a bank have come back to me which is great. But looking on their website it states that they can only lend as long as the property is not your permanent residence which is fine for now.

But what happens should you decide later down the line to make it your permanent residence?????

Regards

Rob

Rob

where are you currently resident, where is the property?

Hi Rob.

That sounds a little odd frankly as the majority of lenders take no interest in whether it is for holiday or permanemt use. In fact I do not know of one lender that would be inclined to the former and not the latter; permanent residents are likely to be more honourable in meeting their mortgage obligations!

Are you sure you have cast your mortgage search wide enough?

Hi Rob,  

 I think basically we are talking non resident mortgage vs resident mortgage.  Non resident mortgages are generally granted on the basis that the property in Spain is to be a holiday home or second residence.  Most lender application forms will ask the question on how the property is to be utilised and if you ticked the box to say permanent home then they would want to know how you intend to pay the mortgage given that they assume you would be leaving your job in the UK!   Coupled with that the bank requires a non residents certificate every 2 years.  All resident mortgages need to be backed up with proof of income from Spain, proof of paying tax in Spain and proof of paying social security in Spain plus a work contract.  The only way I have known people to do this is in the days of Self cert / non status mortgages where income source is declared but not proven. i.e. you could be permanently here but receiving an income from the UK.

If you do decide to move out here permanently then in theory you should inform the lender as your status would have changed; I guess many people do not do this and just carry on paying their mortgage as usual.

Question:

I know that any Spanish mortgage on a property will show up on the Nota-Simple. Is this also true of a non-Spanish mortgage?

If not, is there anyway of finding out if there is a foreign (i.e. non-Spanish) mortgage on a property?

Hi sms0611,    are you referring to currency or lender?    Any charge against a property should be reflected in the nota simple.

Hi Sharon,

I am refering to a foreign lender, For example if a German resident took out a loan with a German bank using the Spanish property as collateral.

Steve

Hi Steve,

If a German resident used the Spanish property as collateral for purposes outside of Spain then I doubt very much this would be reflected on the nota simple - but I also doubt this would be possible anyway.   If within Spain and if it was possible then I would think it would need to be recorded - one for Maria I think!

Hi Steve Sharon is correct - if the property has been used as collateral then legally the debt has to be recorded at the Land Registry and must be shown on the Nota Simple. If someone has borrowed money in Germany then I am 99% certain the debt cannot be recorded against the property anyway even if they had "proposed" the property as security. Even the offshore lenders lending money here in Spain had to record the debt with the Land Registry otherwise they cannot embargo the property without a lengthy process (and possibly not at all) in the event of default.

You dont put your reason for asking the question so the whole scenario seems a bit weird - I  should mention though that there are lenders in Spain of German parentage lending money on mortgage here. That being said they are still Spanish banks in the same way that Barclays and Halifax are Spanish banks (contrary to popular belief) with a full Spanish banking licence.

Hi Smiley,

That was what I was hoping to hear.

I have no specific reason for posing this question but, having experienced some of the tricks which both owners and agents of properties are trying to pull in order to sell properties, this was a scenario about which I could find no definitive answer but one which might arise.

thanks all

Steve

By that I assume you are contemplating buying a property from a German vendor and he has told you there is no mortgage on the property - whether in Spain or otherwise.

Easy to check from Nota Simple - by law any agent that is marketing a property has to provide copies of up to date Nota Simple, IBI receipts, and Escritura (think its law 201 or 281, or 218 or is it on the OCKY with 301 - cant remember as its inception was quite a while ago and everyone was talking about it). Anyway under the law any agent (and or vendor) must provide you with up to date documents. If you are taking out a mortgage yourself any lender will run their own checks on embargoes or any other debts on the property up until the day of completion. This should also be checked on the day of completion at the Notary - there have been instances when people have sold a property and between sale and completion they have then taken out secured borrowings. The system is supposed to protect against that - I think prior to computerisation and being able to check immediately the property's status it could actually be quite a risk. Thankfully before my time but I have had a client go to Notary to complete exchange of Title only to find the owner had raised 25,000 on the property between date of offer acceptance and completion.

Hi Smiley,

   I think you mean Decreto 218 (2005). Funnily enough of the dozens of agents I have been in touch with none of them seem to have heard of it and certainly none of them abide by it. I have not recieved a single copy of a Nota-Simple (or the Ficha Informativa / Nota Expicativa mentioned in the decreto) for any of the properties I have looked at over the last few months. Three agents have outright refused to let me have any more documentation than is posted on their website and many have just ignored my request for more information about properties when I explicitly state that I require a copy of the Nota-simple.

   It is because I am a cash buyer that I am being so cautious, I will not have a mortgage lender to make the checks you mentioned so will have to do so myself, or at least make sure that my lawyers are doing so. I too have heard of cases where a very late loan is taken out on properties and the new purchaser is left holding the debt so I want to make sure I have got all angles covered.

There is one problem with checking the Nota-simple on the day of completion. It can take up to 48 hours to recieve a copy, even if requested online and, to coin a phrase, 2 days is a long time in Spanish Real Estate.

  Ah well, prodeed with utmost caution, seems to be becoming my watchword, thanks for the information.

Steve

Yeah Steve its decree 218 - you can report them if they dont provide it - the authorities now have officials out checking estate agents and going into offices and asking for the buyers pack for properties they are marketing - woe betide them if they cannot provide it - suggest you ask said agents if they want to sell you a property or not.

Notary office checks on line on the day of completion and I think that is you fail safe on completion day - NORMALLY a Nota Simple can be acquired same day on the web