Mortgages

Apologies if there has already been a thread on this.
Husband had made tentative enquiries - spoke to  an adviser in Murcia who has led us to believe that only 60% of property value is available on an interest only morgage. If this is the case we will certainly have to walk away. We had been led to believe that subject to status etc 80% would be available. We really had not anticipated 'topping' up MORE money to get this project off the ground apart from furnishing it etc.
Does anybody have any leads please. 
Advisers feel free to PM me
Carole 

I would also be very interested in any feedback on the subject as it looks like I'm in a similar position to Carole. Also it has been stated that the percentage mortgage given would be of purchase price or current value, whichever is the lowe,r so if it was 60% given this would be a maximum and quite possible lower in practice. One other thing, if they are giving 60% maximum on interest only mortgages it might be an idea to get a repayment mortgage ( assuming you can get a higher percentage) and change it to a interest only a little latter ( if this is possible). At any rate I believe mortgage deal are likely to change considerably in the next few months ( with any luck for the better), although it is best to begin to find out about them now.


kev

I also believe that interest only mortgages generally only have a limited life span in Spain - I've been told 2 years is common then you revert to repayment. I might be wrong so I'd be interested to know whether others have heard of or set up longer period interest only deals.

You are facing the same dilema as many other buyers as in The Spanish market mortgages are becomming increasingly difficult ti get

The normal is that rate for non-residents is 70% of the contract price of the property or the valuation and a big change now is, whatever is the lowesly

Previously people managed to get 100% mortgage when the banks were keen to get the business they might overvalue the property and then give 70% of the value but this loophole has been closed, mainly due bad debts and defaulters

All fees for arrangement etc are deducted from the gross amount loaned so again the money available reduces

Be very carefull as a new practice is that some brokers will offer to finance the shortfall at a much higher rate

The period for interest only is typically 1-2 years and it is worth talking to some of the UK banks here like Banco Halifax and Braclays who have online application forms and the percentage remains at 70%

The biggest problem is that little can be done without the completed property and valuation

Be sure to only take notice of advice from qualified mortgage consultants, either in Spain or the UK, the industry is regulated for good reason.

Interest only periods of up to 30 years are available from banks such as Lloyds TSB in Spain or Leeds Building Society, Halifax have an ok product, LTVs no higher than 70% of purchase price as previously quoted and beware, bank valuations generally are a problem and in some cases not even as high as the basic purchase price.

For further information or any help or assistance, please PM.

Please don´t PM me as I do not provide mortgages and my advice is only based on the practical experiences of my clients who we assist with the completion process, and I endorse your comments only use a company qualified in Spain to provide mortgages and advice

I believed that the majority of the longer term interest only deals reduce the percentage loaned as Bankinter and CAM have recently done, plus I know that there can be large settlement penaltites attached

I agree valuations is the biggest problem with a press release going out from an agent yesterday claiming that  prices for new properties in our region, offered directly by the developers, have reduced by 36%  

On a one site in Murcia I am aware of 70 people that cannot complete based on the bank valuations and where the builder refuse to reduce the sale price, stalemate, but the developer legally can insist on completion

Hi Kev
Repayment mortgages are traditionally much more costly - get the feeling thta isn't what you would be wanting,
I certainly don't!
Carole

The problem is that there´s a reducing amount of choice in the market

Even Halifax who until recently would loan to most people are loaning very selectively 

Watch the small pront and get a good translation of any documents

Hi All,

As there are several posts on this subject I thought I would write and clarify some of the points raised - hopefully this will be helpful!

I have already replied to one of the posts in a different development forum that, as it stands today(!) there is a 70% LTV product (not lower of the purchase price or valuation) with 5 years Interest Only offered.  In fact there is a lender, again offering 70% LTV, with 10 years on Interest Only BUT the rates are, in comparison, quite high.  

Lloyds offer a max of 60% LTV - again rates are quite high - with 5 years on Interest Only and their maximum term is 25 years.

Barclays and Halifax offer to a max of 60% LTV.

Leeds offer 65% LTV or purchase price (lower of the 2) on either a full term Interest Only basis OR a full term Repayment basis and they have TODAY increased their rates!  Term is to a max of 40 years.  Nil penalty for partial repayments or full settlement.

All lenders named above do not charge a penalty for partial / lump  sum repayments and in ALL cases total redemption is 0.50%.

In essense there are still a handful of lenders offering 70% LTV on either Repayment or with an Interest Only element.

In general lenders are changing their criteria regulary and only this week saw Lloyds reduce their to LTV 60% and increase their rates!  

it is important to note that any approvals you can get now at current levels would be valid for 3 months.

Hope above helps,

  

only a couple of things to add to what Sharon has said already - the first being that in light of global circumstances Leeds have today advised tighter income criteria. The second being all lenders are reserving the right to withdraw offers without prior notice - then again in practice they all reserve the right (even in England) to withdraw an offer up until the deed is signed anyway.

In regards to Marvins post there are no regulated mortgage brokers in Spain - mortagges, even from the lenders perspective are not a regulated financial product so no FSA standing behind anyone with a big stick - they have no concept of what is or isnt good advice - most arrange any old mortagge without considering a clients needs (present company excpeted Sharon)

Repyament mortgages not necessarily more costly - simply higher payments as paying back capital (assume thats what you mean Cazbaz) in fact some can be cheaper as rates can be lower for repayment products.

Kev 2 - products are not likley to get better for the foreseeable future - if anything lender criteria is becoming more restrictive - as Sharon rightly says Lloyds at long last succumbed and withdrew their 80% product this week and reduced to 60% in line with other lenders. Also in answer to Kev 2 remortgage is extremely expensive here in Spain so try to ensure that the deal you arrange for completion is the deal you will be content with for the life of the loan. Typically remortgage costs here are in the region of 6% and can be higher subject to lender and existing lender redemption terms - again that is unlikely to change for non residents although the authorities have relaxed those conditions for lifetime loans for Spanish residents owing to the fact it allevaites some of their social security problems.

Hi Smiley,

I agree about the mortgage business not being regulated, more's the pity - there are so many that set themselves up as 'mortgage brokers' and as you say do not have the client's interest at heart.  The good thing is that many lenders will only collaborate with SL companies (registered and equivalent to UK Ltd company) so that cuts out a lot.  It makes me so mad when I hear of clients being informed / advised incorrectly as it looks so bad for all of us!  There are unscrupulous people out there, charging inflated fees etc and ultimately helping themselves rather than others!

 

Agreed wholeheartedly - mind you I hear regulation is under discussion - that could be interesting - taking the equivalent of UK examinations in Spanish - then again I think it would take them about 10 years to produce a manual here for everyone to study unlike the IFS in the UK who managed to put something together pretty quickly after compulsory regulation was introduced in the UK. However I am not sure that any kind of regualation will be endorsed by the lenders as there are so many that prefer not to be transparent about certain things such as how they are going to charge life assurance etc - remember back about 5 years ago when i asked UCI how they calculated their interest - the supposed chargeable rate was for example X - they gave me an illustration to provide to a client and I multiplied the loan size by the supposed chargeable rate - an easy calculation (it was interest only) - the only way that I could get the numbers to match was by increasing the pay rate by over 2% - when I questioned the BDM as to how the rate was calculated the response was "well the chargeable rate is X subject to it reaching a minimum of the Directors rate" - whatever the Directors rate was??? Nobody could explain to my satisfaction how they were calculating and it would not have been so bad (it was bad enough) if the rate had stayed that way but when I extrapolated the interest charges 5 years down the line it indicated the rate had increased by a further 1% still. Un BLOODY believable.

It was at that point that we stopped placing any business whatsoever with UCI - based on the fact that in Spain they were consistently the largest lender in the market for three consecutive years it is worrying how many people out there have got garbage deals that they have no awareness of. Still the French have always been shady characters to deal with - and before anyone starts throwing onions and garlic at me and threatening the Bastille thats a joke.