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I´m currently in the throes of obtaining a Spanish mortgage…..and what a tortuous process it is proving!
I have approached several banks in Spain, and let me tell you, every single one will talk a good mortgage and promise the earth, but when it comes to the crunch, there´s not a lot of action.
Like most things in life, success can often be dependent on the person that you are dealing with at the Spanish bank. My advice is to try to establish a good relationship with the representative from the bank. Most branches have thresholds that they can lend up to – for instance for residents in Spain, the branch lending threshold tends to be around €300,000 – also bear in mind that the first quote you receive won´t necessarily be the best. Don´t be afraid of negotiating better terms, and chipping away at the rate to try to secure a better mortgage in Spain.
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I know what you´re thinking – why didn´t he check with the bank before making an offer? To be honest, I just assumed that all would be ok.
Even now, I reckon that if I´d had a little more time, and the cash buyer hadn´t been on the scene, I could have found a bank to provide a Spanish mortgage on that property in Marbella. For the cash buyer, the risk was all his – no banks to consider. And let´s face it, even in the worst case scenario where the new owner may have been asked to pay a fine as a result of any adverse ruling by the town hall in Marbella, the fact that he secured the property at such a great price was probably enough to persuade him that it was worth the small risk.
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Continued from previous article
Just bear in mind that the vast majority of Spanish banks will now only lend on the PURCHASE PRICE, not the valuation. After all, in the current credit crunch, the banks really don´t want to over-expose themselves (again!), and will want to see you taking on some of the risk by way of a decent deposit.
There are one or two banks in Spain that will lend up to 90% of purchase price if a valuation is hugely in excess of the price you are paying for your Spanish property, but even with this scenario, you will need to find a 10% deposit, plus your 10% purchase costs, plus the costs to arrange the mortgage and pay the mortgage taxes, so you would still be looking at around a 25% commitment.
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The Spanish mortgage market is currently changing on a daily basis.
Most banks worldwide seem reluctant to lend anything to anybody, but here in Spain, people are still getting mortgages. Here is an update on the current situation.
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It seems that we are in the midst of a global economic downturn and a worldwide property crash, so is it the right time to be buying Spanish property…and in particular, is it a good time to be investing in property off-plan?
A lot of agents and commentators are reporting that we are nearing the bottom of the market in some of the more popular areas of Spain, with the attraction of genuine discounts in some of Spain´s most thriving resorts proving just too tempting for a large army of bargain-hunters. So while key-ready Spanish property and resale opportunities abound, the off-plan market seems a perilous place to be in a market downturn. Continue reading »
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Take a Spanish mortgage in euros.
Seriously think about taking a Spanish mortgage. If you mortgage 70% of the price of a Spanish property, your immediate exposure to the currency risk amounts to only 30% of the property price. If you were going to pay cash for the purchase of a €100,000 property, this would cost you almost £85,000 at today´s exchange rate, a difference of over £16,000 from a year ago. However, if you are only exposed to 30% of the price in sterling, your payment of €30,000 would set you back just over £25,000, a difference of approximately £4,700 from last year. Continue reading »
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Sterling has weakened alarmingly over the last 12 months. From its near-peak of 1.45 euros in summer 2007, the rate is now nearer to 1.18 euros. This effectively means that property in Spain is now almost 20% more expensive that it was just a year ago.
The problems with sterling have undoubtedly contributed to the worsening Spanish property market, particularly when you consider that British buyers make up by far the largest single group of overseas buyers. There are simply fewer British buyers now in the market for Spanish property, reluctant to secure an asset that would have been 20% cheaper a year ago.
The current situation is proving frustrating for a lot of prospective purchasers, all keen to bag a bargain property in Spain as the prices have tumbled, yet still reluctant to buy a euro asset with their weak sterling.
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