Mortgages

Hello everyone.

What is wrong with the developer's mortgage? Alot of people seem to be opting out.

 .75% above Euribor does not seem too bad to me.

I agree SRS, its a pretty good deal especially as there are no setup charges.. Problem is some buyers have to stretch their payments over 25 years. The developers deal is over 15 years.

Westport

I agree the developers morgage is not a bad deal at all. I was advised about 12 months ago that the bank would have no problem in changing the repayment period from 15 to 25 years for a reasonable admin fee of 300 euro.

Regards, Andy

We have never actually received details of the developers mortgage - probably our solicitors fault (again) - so didn't have anything to compare with, but the financial advisors suggested that there would be a lower period of the interest only option with other providers.  We can't have (due to age!!) and don't want more than 15 years but welcome an interest free period with the possibility of paying off in full when that ends or if not continuing repayments - only time will tell.

Hi all,

For Your Information:

I have been advised by my solicitor that the inheriance Act in Spain, is different from the Danish (I don't know the British), and I will try to explain in my Danish/English terms, what the consequences are.

If a couple own a property, and the one part pass away, the other part is due for tax for the equity of the proporty. In other words, If you will ensure as little tax as possible you would have as high mortgage as possible. And there is no difference whether or not you have permanent recidence in Spain.

If this have any interest, please seek advise at a professional. If anyone have heard otherwise I would like to know.

Hi Wichmann - I think the situation is the same no matter where you come from. Your Spanish estate will be treated and taxed separately from your estate in your home country. In the UK their is no inheritance tax between husband and wife but in Spain the estate is taxed no matter who the inheritors are. We are putting the apartment in 4 names - ours and our adult children's. This will reduce the tax to 25% of the value of the property when any of us days but not illiminate it. It is also important to have a Spanish will and to make clear in both your Spanish and home wills that they only apply to your assets in that country. 

HI Andy, When I enquired about increasing the term of the mortgage I was told by caixa galicia that was not possible hence I looked elsewhere, have to say though if you are happy with the developers mortgage terms then this is the cheapest option!

Hi Sonia El,

The developers mortgage is 0.75% above the euribor rate for 15 years. There are no set up fees. Remember an advisor gets paiid to sell you a product, and a different mortgage could cost you €2,000 to €3,000 just to set up.

Westport

 

We are not knocking the builders mortgage. When our solicitor asked us if we required the mortgage we visited the builders bank to find out the details and found them reasonable but declined the offer to take it. We had never signed anything to agree to take this mortgage. The builders are apparently trying to force people into taking out this mortgage or incur a penalty of 1000euros, which we understand is illegal. We were wondering how many more people are being put under pressurwe to pay this penalty, and what their response was.

Hi Janmet, I was told at outset that if i didn't take the developers mortgage that there would be a 700 euro cancellation fee. The mortgage is the developers way of financing the project. I am taking the mortgage but i don't think that people should be charged to cancel.

Regards, Andy

 

Hi Janet, We were advised at the beginning that if we didn't take the builders mortgage we wouold have to pay the cancellation fee. However in the sale contract it only says that you have to pay if you at first accept the mortgage and then change your mind. I read on the general board, mortgage thread that it is in fact illigal for the promotor to charge the purchaser for the cost of the cancellation of his mortgage. I posted a question about this and "Smiley"\patrick@marbellamortgages.com confirmed that they could not insist that we pay. I told my solicitor this and they removed the charge from their account summary. The problem is that a lot of Spanish Solicitors have close relationships with the developers and will try to get you to pay these costs even though you are not obliged to. If you want Smiley's help in dealing with your solicitor I suggest you contact him through the general mortgages thread. 

 

Hi Everyone,

Just thought I would post a copy of the Law we are talking about.

We decided to use the developers mortgage in the end as it did work out cheaper for us.

See you all sooooon.

 

Property contracts in Spain !!!!!!

Hi sam

As we all signed our contracts before this law came into force, I would have thought it does not affect us. Maybe I am wrong I dont know.

Westport

Hi All, Some good news for a change! The European Central Bank decided to keep interest rates a 4% today. That means anyone taking the on developers mortgage will only pay 4.75% in total. You never know, by the time Don Juan completes the Euro interest rate could be back down to 2%!

Regards, Andy

 

Hi Otterandy,

At the rate we are going we could have a new currency by then as well.

Westport

 

 

Hi Eoin,

I seem to have started a mini confessional here - which is great.

There are 2 reasons why UK residents prefer a Spanish mortgage to a UK one - the lower €uro interest rate and the fact that Spanish inheritance tax is quite punitive for non residents. (There is some stuff about this on this thread and on the main mortgages thread.) As the 1st advantage doesn't apply to you and as I guess (like me) you're not planning to die any time soon you're hoping the 2nd doesn't either you could get a loan in Ireland if you wish

Hi Davmunster

I think Eoin may need to be careful about how he gets the mortgage on the apartment, as I believe he will be Non resident to the Spanish system, so if he was to remortgage on his property in Ireland, he would be paying off the balance in Spain and be in debt in Ireland, so for inheritance purposes he would be worse off as he has no debt in Spain. Correct me if I am wrong. For those of us resident in the Uk, I think it is best to take the Spanish mortgage, lower interest rates and its better to be in debt in Spain, and also if you wish to make overpayments on any of your mortgages, do it on the Uk one, as the interest rates are higher.

Westport

Hi Westport

I agree that from an inheritance perspective maximising borrowing in Spain (rather than UK or Ireland) is the best approach. I guess I am just questioning the extent to which inheritance planning is or should be the deciding factor - for me it is pretty low and for others it is undoubtedly much higher. Most mortgages require repayment over 10\15\25 years so even if you take the Spanish mortgage if you live long enough you will have to pay the same tax as people who have not borrowed in Spain. My children are all adults who I have paid to educate etc so anything they inherit is a bonus - my priority is to arrange my finances to suit me and my wife. I obviously want to leave as much as possible to my children but this is not a priority at the moment.