mortgages / valuations

hi

we are on phase 4 and nearing completion  !! does anyone have any idea as to how roda properties are holding up for mortgage purposes ?  and the availability of mortgages also if insurance products are mandatory ( as this can add substansially to the cost )  

i must admit to being a little apprehensive as it appears a lot of people arnt completing and as to weather or not phase 4 b will be built or will we be left looking at a hole in the ground for years to come .

thanks debbie

Hello,

I have seen on the internet that Spainish banks are offering about 55% loan to value.

If anyone knows different, please let me know.

Most of the banks are now only offering 60% to both residents and non-residents of the valuation of the property or contract price which ever is the lower

You normally can account for at least 10% for fees so in trutch it is nearer 50% that the banks are now loaning

Most of the sites still have the builders mortgages available at 80% in fact on Polaris there are some 100% builders mortgages available

inspectahome

sorry to ask but dont quite understand ......   are you saying that the valuations are still coming in at the contract prices of 4 years ago when prices were at or around there peak ?     surly this cannot be the case with all the price falls that have occured in the last couple of years ?

No that isn´t what I am saying

Chances are that if you go for the builders mortgage they will come back with a valuation just over, normally around €10k, over the original contract price yes form 4 years ago and grant you  the mortgage on 80% on the contract value which is lower than the valuation

If you go to an independant bank then they will value the property and grant a mortgage on the percentage based on their valuation or contract value which ever is the lower

We have alraedy seen, on some sites, independant banks that will value the property below the contract value but not necessarly on RODA

Halifax will actually now offer a sample valuation, free of charge, but agian only lend 60% with up to 5 years interest only

sorry i must be having a blonde day !!

how can the developers mortgage valuation value the unit higher in todays market ??  surly independant valuers cannot be under valuing units and why would a developers mortgage valuation be higher than an independant one ( other than the obvious reason) ......  my current understanding would be that the developers mortgage would be fraudulent based on an over inflated valuation ( please tell me im wrong and dont understand it is the end of the week afterall !!)  

The developers mortgage will be based on the historic information, when they agreed the initial construction and not necessarly the current market conditions, so no it will not be fraudualent and the person doing the valuation works for the bank, not for the client, and the decision is based on the risk for the mortgage

The client has after all agreed to bu the property at that contract value

Another valuation will be carried out by a different valuer, same calculation required based on risk and of course perhaps only 60% of any valuation

 Hi All,

My question to RODA has been that.....If the bank valuation is lower than the contract price, it will probably partly be down to the current economic situation, but also the lack of a shopping mall, hotel and other facilities being built at RODA.

I am hoping that RODA will do their best to make up any shortfall of mortgage offer.........no reply as yet.

KDG

Debbie - mortgages in Spain are different than in the UK.  When they say 'developers mortgage' they don't mean one provided by the developer - it's basically the reassignment of the borrowings that the developer already has on your property.  The developer will have a mortgage assigned to your property for the monies borrowed by them to complete the build.  If you choose then you can take over this mortgage from Roda......the bank will contact you before completion with the relevant information and to see if you want to keep this.   You may find that the rates are slighly higher than on the high street but the benefits are that in the current climate the valuations used at the outset may well be higher than what you would get now, and hence you can borrow more.  You can also save fees by assigning this to you rather than taking out a new one.  Mortgages in Spain tend to have fees to pay both upfront and when its settled, hence which ever you pick it's likely you will have it for the full term as these end payments generally outweigh any savings you would make by remortgaging to a different product.

Hope that makes sense.....it's been a while since we did ours so that's as much as I can remember!!

I am sorry but I am loosing something here surely the first thing is to wait t see what actually happens on the valuations

The developers mortgage will come in above the contract value , ans I am not a mortgage broker but I believe that the rates are I competitve, and you will possibly save you money on setup and broker fees.and stamp duty

What you won´t get is an interest only option which fewer banks are offering this now and again typically only on 60% LTV

The developer will argue that there is no short fall

scottbabe / inspectahome

many thanks for your patience and time in explaining the situation re developers mortgage , but shouldent mortgages be based on current market conditions and open market value of the property ?  in theory if you take the developers mortgage you could have immediate negative equity , surly that is not good for anybody except the developer who no longer has the property on there books .

as i say maybe i am missing something but i cant see how lending 80% of a 2006 contract  price can stack up when judging by roda resale prices  they appear to  have come off in the region of 30%  afterall the resale market is the true open market value in the current conditions .

i agree to wait and see what the valuations come back at but what i am struggaling to understand is how they will be above 2006 (boom time ) prices when the market has come off so much , i am of course assuming there is no collusion with the valuers / banks / developers (cynical i know )

I will try to I hope present a balanced view on this as there are many considerations here that have been debated on the site

Some would argue that if the originally promised facilities were in place then the value of the properties would be higher, perhaps if the properties were ready earlier the effect of the economic decline would have been less

Yes fact if you buy most off  plan properties today on contracts from 2006-2007 you will immediately be in negative equity

The counter argument is that nobody could have forecasted the decline in property prices and back in 2006, when people bought, at what I asume they thought was a fair contract value, did RODA or the customer have any idea on what the market was doing.

There are lots of distressed sellers that are desperate to sell, at well below the real value of the property but again they may have benefitted from a euro rate of 1.4 back when they bough so can acually sell at less and get the same sterling amount back

Yes it does favour the developer but here´s a question, if when the property was valued, as back in 2004-2005 the property had increased in value by €40k over the contract value would you be willing to pay more money to the developer

Hello Roy,

How are you? You did the snagging for me on Roda.

Roy, I have disagreed with most of  the negative comments that you have received in the past, because I honestly think you are offering what you consider your best advice to people in these difficult times. But I think that sometimes, before you press the the save button, you need to read what you have written. This particular piece could easily be construed as a Calidona employees article. 

People paid a premium in early 2005 and onwards for facilities that in 2010 are non existent.   Buying off plan does not mean you do not get what you paid for! Therefore the fair Contact Value you mention reflected the EXPECTED AND PROMISED FACILITIES. In 2005 the future vagaries of the market were of no significance to the Contracts signed in good faith for the facilities promised.

Your figures re 1.4 euros against the pound do not stack up. You need to do the maths again if you think your argument is correct.

Re your last point ;  the Developer agreed to provide the facilities advertised, so increases and decreases would be of no significance if those facilities had been delivered in a reasonable time frame. Nobody could have an argument.

And this is where people become annoyed with your comments.  You are entering into sensitive areas were peoples whole futures can be detrimentally affected, most likely with the best of intentions, but with ill conceived  aarguments.  

Regards, Frank      

Any new mortgage will be based on current market conditions Debbie so you're probably looking at 60% of valuation (on the assumption that valuation will be lower than cost)  Re the assignment of the builders mortgage however what you are possibly missing is that the bank are already at risk for this amount of money on the property so whether it is Roda who owe them it or you probably makes no difference to them hence they can potentially lend a higher percentage.  Like in UK though your income figures need to stack up so lending may be restricted depending on this. 

You could be correct about the negative equity scenario but unfortunately people have contracts which will not let them withdraw so some purchasers will have no choice other than to go ahead with taking on the developers mortgage.   Incidentally my earlier post did not mean that the developers mortgage was expensive I just meant that there may be better rates on offer, or as Roy said many people are looking for an interest only period to reduce the payments short term and hence may have to go with a new product.   We did not choose the developers mortgage but there was not much of a difference really.  On a positive note though our apartment did value at the purchase price in Oct 08 and although there are many cheap properties out there as a result of forced selling this does not necessarily mean that the surveyors valuation will come in at the same levels.

We used Kevin at www.mortgage4spain.com who explained it all to us - would definitely recommend!

Hi Frank and yes I am only trying to present things the way they really are in Spain, at the moment and I am sure that all of the arguments about the lack of facilities are true and justified, but I also feel that it is not 100% down to the developers but yes they have their part to play and I am certain that any pending legal cases will resolve this issue

I personally own a number of properties, all of them have lost a considerable amount , luckily not in negative equity but close, that are close to but not on golf courses but have local facilities cannot sell them at the moment. One property was valued €30k over the contract value in 2007 but now is probably €20k under, yes it has lost €50k. I could afford , if I could sell it, to take less as I bought forward my currency at €1.4 providing I wanted to change the money into sterling because I would get back close to the original sterling price that I paid

Also because of the fall in the Eurobor rate again yesterday I am also paying almost half the original mortgage payment amount, especially as I selected a mortgage based on a monthly rate review from the Halifax

Again I do not agree with the way that people have been treated on this and many other sites, there are people on sites including Ochando, Finca Parcs, Jumila, Fortuna Gold, La tercia Real, Trampolin Hills, Polaris  and others where developers have gone busr leaving people with no bank guarntees and no way of getting back the deposits that they have paid

Yes my posting are always therefore meant with the best of intentions to provide the current and real state of play, would I buy off plan in Spain at present no, would I buy a bargain resale yes

sorry didnt mean to open a can of worms !!  

thanks for all the comments  and views , with or without facalaties  forgetting exchange rate still dont understand how something can be valued above 2006 prices  in todays enviroment without what could possibly be interpereted as some sort of duplicity between developer/ valuer / lender .       all help appreciated  .

There is no problem as I believe that this needs to be an onging debate

Just to explain the currency thing my own property originally cost €140k including costs and at that time the rate for the euro was over 1.4 and, as I changed sterling the real cost was just under 100k pounds

Today with the rate at 1.12 therefore I could sell the property for €112k and recover all of the original money paid in sterling, what appears to be a loss but I would gain on the foreign exchange so that´s why there are so many older properties being sold by people who are going back at well under original contract value

If I was buying something else I would again not be as worried about the reduction as many properties  has reduced by similiar percentage, I could look at an interest only mortgage, and lower rates but I would probably change the funds back into sterling

People don´t realise that In Spain, if you are selling normally the buyer pays all of the fees, apart from an agents fee,  so the sales price will actually increase by around 10% so you have to add 10% to any advertised prices

hi ,

i appreciate all the currency fluctuations and how that can effect current owners decisions and pricing ,  i still cannot however see how a unit can be valued above 2006 prices in todays market unless there is duplicity between the parties involved , i was under the impression that the developers were under pressure to clean there acts up and this sort of thig was a thing of the past ??  or is it still rife in the region ? .

as i say i understand yout rational on selling a currently owned property to either upgrade or downsize but that does not apply to a newbuild sale and as you point out "many properties have reduced by a similar percentage "  yet that does not appear to be the case on roda which looking round the resales from villas to apartments there has clearly been a significant decrease in values .

yet as i say the valuers/ banks are still valuing above 2006 prices HOW CAN THIS BE ? 

sorry to be a pain with this but i am simply trying to get some clarity on the situation .

Hi debbie,

The true valuation of any property is what the market dictates ie; what people are prepared to pay for it, and it is as simple as that, the builders bank are obviously trying to get buyers signed up for as much of the original price as possible in order to recouperate as much as they can from there monies lent to the developer, we all know without doubt these properties are not worth what they were in 2006 and we dont need a surveyor to tell us that.

Noel.