mortgage advice

Any financial gurus out there. If you have some spare cash would it be sensible to pay off as much of the debt at the start and take a small mortgage or take the largest mortgage possible and hopefully pay off large lumps if and when the exchange rate improves. Would be grateful for any opinions.

Regards 

Jollyjack 

Hi Jollyjack,

I can say that many people are opting to take an element of Spanish mortgage when they were originally going to pay cash and obviously this is driven by the current poor exchange rate.   The greater the debt the less inheritance tax obligation (albeit a long term benefit!); the smaller the debt the better the deals!  The max you can borrow is 70% and rates are not great but anything under 60% can secure a competatively good rate.    If you are looking to make lump sum payments or totally redeem then a product with no penalties would be better.  Also if you are looking to hold the mortgage for a relatively short time then maybe an Interest Only product to keep monthly repayments at a minimum.

Hope above helps,

Hi jollyjack

Welcome to the forum

I have followed exactly the line stated by Sharon, for the reasons she has given, I have a 60% LTV repayment mortgage which I can pay off in full or part at any time in the future without penalty.

One thing to remember mortgage fees and cost are quite expensive, so consider this when deciding, but with the exchange rate as it is at the moment for me it’s was a no brainier.

Phil

Yes, absolutely - cost wise you are looking at approx 13% over and above purchase price.  Also watch out for the lenders that impose their Life Assurance - this can be very hefty!!!!!!

alot depends on what the mortgage costs will be (rate s have come down but generally alot higher than in uk at the moment).the costs of taking a euro mortgage can be prohibitive.what return will you get if  you invest the money in the uk.also if you take a euro mortgage now you are geeting euros at 1.10 so if you are looking to sell and the rate goes up you will lose out if you sell without a euro mortgage.

however if it was me i would have the least posible euro debt and keep the cash aside for a better investment opportunity.rates will surely go up when the economy improves and with the governement fiscal stimulus high inflation remains a high probablility.

Very grateful for comments given. I have been offered the builders mortgage by Banco de Valencia, they argue that set up costs will be far less. Anyone chosen this option and been happy with it.. I think this has been discussed before but cannot remember what the general concensus was.

Regards

Jollyjack

The Eurozone lot are finally acknowledging they have a financial crisis on their hands ....... as always the manana affect has aided their exchange rate for a short period of time till they finally came clean, even now the full extent has not been admitted.

The 1.10 to 1 rate remains false, it will start to climb mainly from Q3 onwards this year and will get back north of 1.25 probably north of 1.30 within 12mths. George is correct in that inflation will also kick in as the recession ends which also means higher interest rates to try and control that inflation, but not till after the inflation has taken hold as the governments around the world will need some decent inflation to devalue the level of debt they have taken on............. hefty controlled inflation can be a good thing sometimes as long as its controlled and short lived. Higher inflation means higher wage rises, means increased value of assets/goods whilst debt remains the same - so the equity gap grows again. Low interest rates/inflation can make things seem cheap but balance this against difficult to obatin mortgages, declining asset values and zero wage rises/pay cuts. Personally would rather have 5% interets rates, 5% inflation and 5% wage rise, that way my assets increase whilst my debt devalues/reduces.

Take out a partial euro mortgage, match your asset to the currency its valued in, then as sterling increases in value again then take advantage to reduce the actual euro debt.

And this is all opinion, you have to decide what's good for you.

Hi Jollyjack,

By taking the developrs morgage you will save on upfront costs; there will not be stamp duty to pay on the mortgage and this can be up to 1.8% - plus less notary and registry fees and of course no valuation fee!  It's just a question of whether their product meets your requirement.

interesting post shampers.i called for the £/euro to fall to 1.10 and am now looking for it to rise again.sterling rates have bottomed and euro rates will continue to fall.germany has a decent economy helped in part by the new car for old  discount policy(the german stock market has surged 25% in a month) but the rest of europe especially spain and ireland and the eastern european countries are in a complete mess so i agree that sterling could rise from here which is also confirmed by my technical analysis (but please dont put your mortgage on that-lol)

You did George, I'll give u that.

I've always said that sterling would rise from Q3 onwards this year, although from a 15pts lower base than i expected.

If the Eurozone lot had come clean about how bad things and reduced interest rates sooner as they should have done then the rate would not have gone as low as it has. As a result of what the Euro lot haven't done quickly enough their recession will be far worse than it should have been, even the UK/USA Govts could have done things quicker to reduce the pain, but the Euro lot are just a joke when it comes to running their countries, the Spanish Banks for instance are in far worse shape than they care to admit - heads in sand mentality, the Irish, Greeks and Italy are all likely to end up at the IMF - Spain will be close to following those 3 due to the additional damage done to their tourist industry coz of the exchange rate following hot on the heels of the damage to their property sector and the general worldwide recession, we haven't quite bottomed yet, and the pain will get worse even after we do.

do you trade the markets shamperr or have a financial background.must admit id prefer you to be in charge of the ecb rather than that idiot trichet.i agree with your imf thoughts.the pain in spain will carry on for longer cos they made the basic mistake of thinking they would survive forever on tourism rather than developing other industries from the profits they made.i also think its crazy they still charge such high property purchase taxes..unemployment on the costas is extreme at the moment with no jobs anywhere.

as you know in the uk there are no taxes to 175k  on house purchases but in spain its still about 10%.scrap that and they may have a better chance of recovery as building houses has such a knock on effect.

the germans have realised this with cars which is why they have offered huge discount for people to scarp old cars and buy new ones.for this reason the only motor industry in the world in full production is fords in germany.if brown wasnt such a twerp he would do the same here because as the germans know with new cars come benefits to alot of other related industries.

spain could also do this with seat imho.