Euribor Rates

The most important point is :

When you take out a mortgage in Spain, EU or UK you make sure that before you sign you know fully the terms

Even more today with all the credit crunch

Most buyers in Spain from UK in 2009 will have a big deposit [ or pay cash] and this type of customer  is very attractive to banks.....low risk

Spain is not that much different form UK....all banks are now looking for low risk loans.....buyers with big equity...they get the best deals.....but only if you ask and look for them

Previously buyers were not often concerned with the small print but if you now do not like your terms you should look at the cost of a refinance

Every situation is different and the Spanish system is in a way different but 'in many respects the same as UK'

In UK many have found using a broker is the easy way to get a good deal..and I'm sure that they will agree not always...so if you want a mortgage in Spain speak to the brokers but also have a go yourself.....then compare

The broker as a rule can produce the goods

Ps I am not a mortgage broker nor am I connected to any one...like to be an independant agent 

A great deal depends on the features you want.

Interesting your point Brian as many lenders have now started to insist on things like compulsory life assurance cover if you want their mortgage. they are aware the market is not as easy as it was - even for high net worth individuals with low loan to values - many lenders have also increased rates as it is more costly for them to borrow - things like long term interest only are also harder to find and one lender now charges Euribor plus 2% plus for the privilege. many of them simply do not wish to lend to non residents - even at low loan to values and good client profile.

We have reached a "take it or leave it" situation with the large majority of lenders in Spain - there is an attitude "you dont like the mortgage we are offering, get one elsewhere". From the lenders point of view it has become a sellers market as lenders reduce maximum loan to values etc. Dont get me wrong there are still some favourable deals out there but they aint as easy to find as you think.

Always listen to the experts and it will be interesting to see how the availability of finance changes in  2009

If the Spansish government wants to get the property market moving again [ now or at some time in the future] then finance has to be available

So political pressure will come from somewhere! 

Same situation in UK and if the credit crunch is not sorted out in 2009 then we will be in for a 30's style recession!!

The Bank of Spain has a very cautious approach and albeit the Govt wishes to catalyse the property market I rather suspect it take more than Govt intervention to sway BOS policies. We shall see.

I rather think that the UK is heading towards a 30s style recession already - if Darling/Brown answer is to simply print more money without getting to the root of the problem then I rather think the slide is inevitable - the same thing happened with Weimar in Germany, more recently Zimbabwe - there are any number of other illustrations especially South America where history has already proven it is not the answer.

> from out of the past..............
>
> "Owners of capital will stimulate the working class to buy more and
> more of expensive goods, houses and technology, pushing them to take
> more and more expensive credits, until their debt becomes unbearable.
> The unpaid debt will lead to bankruptcy of banks, which will have to
> be nationalised, and the State will have to take the road which will
> eventually lead to communism"
>
>
> Karl Marx, Das Kapital, 1867

Thanks Smiley

Does the change in interest rate get backdated or does it just take effect from the review date?

To all intents and purposes it takes effect from the review date - HOWEVER it depends on the terms of the mortgage deed and the binding offer issued as to what revieww date is applied - different lenders have different methodologies for this - some apply the month of the date of completion as the date of reference - others apply the date that the offer was issued and the mortgage deed documents drawn up - thus you may find that the rate applied is the previous month although the anniversary of completion is the next month. Complicated I know but this is Spain - "the right way the wrong way and the Spanish way"

My wife is at present remortgaging from UCI with the dreaded IRPH to Unicaja who quoted Uribor 12 month + 0.7%  with annual reviews ( she has various insurances etc with Unicaja)

The rate she is being quoted is considerably above this however.  When I queried this I was told that the actual rate used is euribor 12 month average!  Is this the same rate used by all the cajas.  Although this still represents a considerable saving over the UCI motgage it does mean that it will take 3 years to recover the costs of switching.

Not every lender takes an average of the previous 12 months. Mortgages are not a regulated financial product in Spain so there is no particular control over them to advertise something and then find that the small print actually is actually something else. Not all the cajas use an average either. Some lenders use the rate prevailing in the month of completion, some lenders use a rate one or two(unusual) months prior to the rate prevailing at completion. Remortgage as I have been harping on about on Eye on Spain for about three years now is a costly procedure hence it is important that any mortgage client knows that the mortgage they arrange for completion of purchase is the right product for as far as can be determined into the future.

im getting rather confused about how the banks calculate what rate of interest they charge.

We completed Oct 2007 and for the first 6 months was on a discount rate. Then we went on to Euribor +0.7. This will get reviewed every 12 months and our first review is May 09.

If as an example the rate remained what it is today what rate should we expect to be paying from May onwards. By the way our bank is bancaja and i take it they did not include the discount period before starting the clock ticking on our 12 month review period.

Annual Euribor is approximately 2.5% - thus pay rate should be 3.2% assuming no change in rates - however a great deal depends on whather there are any conditional terms in the mortgage deed which do sometimes apply

Folks,

For Euribor rates I check:  finfacts-dot-ie/Private/dbn/dbn-dot-htm

Any queries; just shout ... hope I can help.

T

Euribor

the  3 mos euribor rate dipped below 2% last week.i fully expect it to come down by at least 1/2% in first week of march.the german and euro gdp figures were awful on friday.a full 1% off by summer to equal uk base of 1% is expected.however if someone shoots trichet it may be quicker.

Hello everyone! This is my first thread, so I hope you will be gentle with me!

I am about to conclude on a flat in Sucina (El Mirador) marketed by Golf Invest and have to set up my mortgage. I have terms from a broker I was using in UK (La Costa) and terms from the builders mortgage (CAM Bank).

The UK brokers mortgage shows a rate of Euribor(2.62%) + 1.5% 2yrs Interest Only then repayment. It is available up to 70% purchase price/valuation, but based on the current market am concerned that the valuation may not stack up and a higher deposit will be required. Their set up fees amount to about £900.

The builders mortgage shows a rate of 4.5% for first 6 months then euribor + 1.25% thereafter. The bank are suggesting I will save about 3,000 euros by using their mortgage and full balance (about same figure as above) is guaranteed to be available for mortgage as builder already has mortgage arranged. They insist on compulsory life assurance that works out about 1,200 euros per annum, which as I know how much I could get equivalent cover here for seems excessive.

My main dilemma is that if I went with the first option, and the property does not value up I will pay a higher sum again, which I am not keen on at present, the builders mortgage quotes a higher monthly payment just now but is reviewed after 6 months, by which time it may be lower.

Anybody used CAM Bank before, or used a builders mortgage. Any suggestions appreciated.

Thanks

why would you take out life insurance on a  second home.waste of money.check the law on that one.im thinking they are pulling a fast one

Thanks georgeh, I have queried this with them, and bank are insistent saying it is for security of payments. I dont like idea of this myself, but wonder if it's best in long run.

gotta be careful what i say -i am a life insurance salesman

but you need to cover all your liablities on your main home and a reserve for your family.

there is a 30% min equity  and im guessing they would sell on worse case scenarion.

so why not cover 20% so that covers 50%.

this is all off the record.

The life cover is expensive at 1200€ per annum unless your age or health have incurred a premium loading.

You are quite correct that subrogating the developers mortgage will save you money in start up costs as the developer should have paid the mortgage tax and Notary fees.

The problem is that if the developers bank is insisting on life cover if you want their mortgage then you will likely be obliged to take it. Lenders in Spain are now in the driving seat and many of them are taking the line "that if you want our mortgage then you take our life cover". Some of them have been caught with owners passing away and no life cover to redeem the mortgage - they are left with a property on their books that they then struggle to sell owing to the state of the property market - this alleviates the problem for them as the life cover pays off the loan. One can argue that it is not necessarily good advice or in the clients best interest but the lenders attitude is "in that case arrange your mortgage elsewhere with a lender that does not require it". Some lenders will permit you not to take their life cover but in turn charge a premium on the interest rate. There are still some lenders out there who do not insist on life cover but the number of avenues is declining.  

Thanks for the replies, georgeh and smiley, and don't worry georgeh, I'm an IFA myself and what goes on tour stays on tour!

I think if the property market was where it was before then I would probably go elsewhere, but I am concerned that the 70% ltv that I can get just now outwith the builders mortgage is based on lower of purchase price or valuation, and if valued at present may mean a more substantial payment is required.

As far as I know, I would not need a valuation with the builders mortgage. Regarding the life cover, it has not been underwritten yet, and is based on our ages(44, 43 and both non smokers). They will not allow me to use another life assurance company, it has to be arranged through the Bank.

In house life cover is standard for those lenders that insist on it. Most lenders now assessing on lower of valuation or purchase price. In fact the Bank of Spain sent out a directive over 2 years ago reminding lenders that mortgages shouldnt simply be based on valuation and should bear a relationship to purchase price. The BOS guidelines ar actually "softer" than most lenders are now applying but lack of "caution" previously now means that their own Risk departments have gone to the other extreme as they are all now S??T scared of toxic debt.