Developers Mortgage

Hi

Can anybody give me any details about the developer's mortgage?

We enquired to our solicitor & had a reply from Banco Andalucia quoting a rate of Eur +1% Arragement costs of 0.25%.

Can anyone confirm that if you take the developer mortgage you do not pay the stamp dauty of 1% of the purchase price?

Any info appreciated

Thanks

 

Hi regardless of who you take the mortgage with or wther you have a mortgage at all you still have to pay the 1% stamp duty.

As I understand it the standard developers mortgage is

Period of time: 15 years (you could apply for 20)

Interest rate : eur+1.25

Steve, don't know whether you're interested or not, but we took the same option as you, with the developers bank, with the addition of the first year interest only. Jan

Steve,

Did you have to take their home insurance policy?  Does your mortgage term allow you to pay off the mortgage anytime during the mortgage term?  The bank is not keen to send a copy of the full terms and conditions.  They have told me that I have to take their home insurance policy in order to qualify for the standard terms you quoted.

Kamal

Hi, can anyone who has taken out the developer’s mortgage tell me if your mortgage amount included the 7% IVA or have you had to pay this separately on completion?

We have just had final figures from our solicitors and they haven’t added ours.  Many thanks Carleen

Carleen,

The bank worked out the mortgage amount based on current valuation (which is well above the amount that similar properties are advertised for sale in the development).

Kamal

Kamal / Carleen

Same for me, the vaulation was about 25k Euros above what I paid so I was able to take out a bigger mortgage than I thought thus coverrring some of the costs like iva etc.

Steve

whilst waiting for answers to other pre-completion enquiries I am re-evaluating the mortgage options.

I initial opted for the Developers mortgage because my lawyer stated that taking this mortgage has these advantages:  i) it would save 1% stamp duty on the new mortgage deed   ii) it will save on the Notary fees and registration costs.

The downside is that you pay 1% fee for full early repayment or part re-payments. It is Eurobor +1.25%  compared  to Steve's  Eurobor +1% but the developers mortgae hasd no minumum rate compared to Steve's alternatvei with the same bank that has a minimum of 4%.

I have just read that switching mortgages in Spain at a later date is very expensive (because of stamp duty, Notary fees etc) so it is important to get this right.

Steve previously posted   "Hi regardless of who you take the mortgage with or wether you have a mortgage at all you still have to pay the 1% stamp duty."

I am trying to reconcile  that earlier statement  with my solicitors advice.  From my research I am aware that we pay 1% stamp duty on the property purchase  but  I assume that we also pay 1% on the mortgage deed  except for existing mortgages being transferred.

Does anyone experience on this or maybe reference to an authorative source - most web sites I come across tend to have high level summaries / overviews?

 

PMillsom, I think you'll see that Steve's mortgage (and ours) is, in fact, with the developers' bank - it's just that we've arranged, independently with them, slightly different terms. In fact, the non-resident mortgage they offer (what we have opted for) is standard - although we have had ours extended to 20 years and with the first year interest only. You have to communicate with the bank (Banco Andalucia in Puerto Duquesa) directly and just discuss it with them. Jan

Hi Pitby, 

Thanks I have been in touch directly with the bank 'Grupo Banco Poular' and obtained the details.  Their mortgage is one that I am evaluating.  But I'm still not clear on Steve's statement about it not making any difference to the Mortgage Deed Stampt Duty.  My lawyer advises that not taking the developers mortgage results in a stamp duty fee of 1% on the new mortgage. 

Perhaps you are saying it is the same mortgage but you have been able to change the terms?  That would explain it.  Is that what you were able to do?

Paul

Paul, maybe what your lawyer is talking about is the "transfer" fee, ie taking out a mortgage with another bank and having to "cancel" the first mortgage (the developers'). I think it may be referred to as the subrogation fee? I'm not sure, but I recall seeing that listed on the terms originally submitted to us. Jan

Forgot - basicallyl it means registering the interest of the new bank on the deeds, rather than it remaining in the interest of the developers' bank. So, whatever bank/organisation you take the mortgage out with, other than the developers', there will be a subrogation fee. I think that's what it is, but am open to correction! Jan

My undersandoing is I think the same as Pitby's.  As I understand it you have to pay 1% stamp duty on a new property no matter how it is financed whether you have a mortgage or not and if yo do no matter who the mortage is with.  I think this tranfer fee is around 300 / 400 Euros and comes into play if you take out a mortgage with anyone other than the Banco Adalucia (popular) where the developers mortage is with.  I see what you mean about this being contrary to your lawyers advice. 

Thanks for the helpful comments.

My current understanding is:

If you take developers mortgage the up front cost is only a 0.25% subrogation fee.

If you take any alternative mortgage then you will need to pay

a) Stamp duty (1% of mortgage value) which is additional to the property stamp duty (so says may lawyer)

b) Arrangement fee (ranging between 0.25% up to 0.90%)

c) Additional Notary Fees

I've done some investigate and created a simple financial model comparing the developers mortgage with the banks alternative offer for non-residents. 

Although the Developers mortgage has a higher interest rate (an extra 0.25%) the open market mortgage with the same bank has a high  take-on cost (stampt duty 1% and arrangement fee 1%).  So it takes about 8 years (with my mortgage value) before the net costs of each option break even, and that evaluation is without discounting the cash flows.  Discounting will make the Developers mortgage more favourable.

Also the open market mortgage has a minimum 4% interest rate but I am not aware of a minum rate for the developers mortgage (still checking).  So you need to take a view on whether interest rates might fall again in the next 8 years.

 The plus side for the open market mortgage is the servicing costs are less because it is 20 years but that is not so significant (in relative terms) if interest rates rise   or indeed fall below 3%.

Does anybody have a contact name, and/or an e.m. address for the Developers Bank in Puerto Duquesa? This message board has been saying that Block 18 will complete in July, so I think we had better start to make some enquiries. How long does it take to arrange a mortgage in Spain? Can it be done without visiting Spain until completion?

Thanks to everyone who has contributed to this board. The information you have provided is invaluable.

Regards, MCK

MCK

I used Banco de Andalucia ...they are the developer's bank and are in the port. The manager's name is Ignacio..speaks very good English , having worked in England. I sorted my mortgage in about a month remotely from UK and have been very pleased with the service I get. I always pop in to see him when in Duquesa.  His email address is

MANILVA URB. 1 00043175 00043175@bancoandalucia.es

John

John,

Thanks a million for the info re. the bank in Puerto Duquesa. Much appreciated.

Regards,

MCK