Anyone heard of or used - lowratespanishmortgages

The term "risk to reward" springs to mind, Soros had two major advantages over most of us;

a) massive cash reserves in pure liquid form-thus allowing him to lose and not go broke

b) due to a) above massive purchasing power meaning deals he made would not be available on the same rates to the average person

However the opprtunity as you rightly point out is there for all, we have recenlty taken up an FSA registered offer of investment into a currency fund which over the last two years has produced 4-6% per month, risk greatly offset by hedge fund taking 95% of investment and shielding.

But even hedge funds can get it wrong - I seem to recall Bankers Trust falling foul of their in house Hedge Fund taking a massive position on currencies and thought it had been hedged correctly to shield them from adverse movements and got caught with their pants down in the late 90s - ultimately caused them to be taken over by Bank of America (I think) - at the time I think BT were in the Top 25 in the world or thereabouts but certainly a massive institution

Soros also had other advantages - first he has an economics degree from the LSE - second the Quantum fund was established at a time when currency markets were very much in their infancy - he also traded a spread of currencies and didnt have all his eggs in one basket and he had a team of analysts watching market movements 24 hours a day - add to that he had enough reserves to effectively cause the Bank of England to go bust in 1992 by selling short Sterling would indicate he is not the average punter with a mortgage in Spain. Notwithstanding the fact remortgage is horrendously costly in the first instance here (typically 6 to 7% of the loan size) I would question whether it is good advice for Mr and Mrs Average who would prefer to sleep easy in their beds - if they can reconcile the remortgage cost in the first place what happens if things do go tits and they want to extricate themselves from their Yen or Swiss Franc mortgage. rates in Spain have now come to the end of their upward cycle and are starting to ease back down so annual adjustments will start to reflect new pricing. Add to that the fact that currency switch lenders have a clause (certainly those that did lend in Spain) had a clause in the mortgage deed that meant they could call on a bullet payment in the event of an adverse movement - thus the value of the property starts out at 300,000€ - mortgage taken of 250,000€ equivalent but owing to currency fluctuation value of property is is now only 270,000€ equivalent - lender has the right to immediately call in the differential to maintain the loan to value ratio. My view for what its worth and I spent 20 years trading currency markets in a former life is that they are most certainly not for the faint hearted and for the uneducated or inexperienced.

I couldnt agree more and jave poste don the risks of currency mortgages, the infgormation i mentioned was not mortgage based, I will send an eg over to you.

I know the basis of your post Shaun and that it was not mortgage related - was simply pointing out the perspective to George Soros and Mr and Mrs Average and their situation re a currency switch mortgage - if its an investment and the client/investor aware the risk reward ratio no problem

Just back into office-brass monkeys outside-the most interesting factor is that the firm of accountants have fsa approval for it-will email to you this afternoon as would appreciate your previous lifes experience on it.

dont know if you sent me anything but didnt receive it mate

Hi

I doint know if anyone can help I have had a mortgage approved by the sole bank and they have given me a rate of  Euribor + 1,75% for a amount of 119,000 Euro is this good or bad  am not too sure as the repayment seems a little high at 791.00 Euros

Thanks

Euribor + 1.75 is on the high side but many banks impose a surcharge on interest rate if you do not take some of their compulsory products. Its a long long time since we have used Solbank (I assume that is who you mean) but I seem to recall that they also imposed a surcharge for additional features such as higher loan to value or longer period interest only.

sorry cock up and posted twice

Quote p11cne:

"I doint know if anyone can help I have had a mortgage approved by the sole bank and they have given me a rate of  Euribor + 1,75% for a amount of 119,000 Euro is this good or bad  am not too sure as the repayment seems a little high at 791.00 Euros"

Crikey! That seems very high to me, especially looking at the current Euribor rate!

Smiley arranged a mortgage for us in June 2006 with GE Money and we accepted an offer of Euribor + 1.25% on a loan of 175,000€ and this month we had our review, which most banks do every six months, and our monthly repayment is only 564€.

Ask SolBank what 'Euribor monthly average rate' are they basing the loan on, as some banks use the previous months average rate, whereas some banks go back two months. Also most banks use the 12 month average rate whereas some use the 6 month average rate, again most banks review the your repayments every six months, whereas some do an annual review.

If you want to compare notes with your bank about average monthly Euribor rates, then look here:

www.euribor.org/html/download/euribor_average.pdf

I agree, 1.75 over Euribor is on the high side, there are certainly better deals out there, so it could be worth shopping around before you accept this.  it is also a long time since we have used Solbank but look out for the mortgage protection insurance which they used to insist on.

Hi

Thanks for the replys the problem that I have is that it took over 4 banks before 1 bank said yes which was solebank so iam in a bit of a hole in that I cant seem to secure mortgage with any other bank. Will I be able to re negotiate the rate with the bank before I complete

Thanks

So I guess by now you are mortgage application weary!  I do think it depends on what banks you approached and the reason you were getting for refusal from them; am I right in thinking you applied to these banks direct?  Definately ask Solbank to review the Euribor rate and you could challenge the margin of 1.75 but I do know that is what they are currently offering over Euribor.

I think most banks are now getting  very weary of offering mortgages to new clients.

It depends on the loan to valuation ratio that you are asking for as to what rate they will give you, so the less you borrow the better the rate, as the bank looks at the fact you are putting more of your own money into the purchase.

If your having a problem with the banks in securing a 'good' mortgage then it might be worth your while asking the vendor/promoter of the property you are looking to buy if they are interested in doing a 'rent to buy' option, as you could do this over a maximum of three years and the amount of rent you have paid over this time then comes of the purchase price.

Thus when you come to buy in six months, one year or whatever the banks may be more willing to lend and you haven't lost the property you want to buy.

Just a suggestion.

Rent to buy works for a lot of resellers but rarely will a developer consider it as they want their money now. If P11 has had the issues over securing borrowings believe me the situation aint gonna get any better in the course of the next 6 months. Liquidity is poor and while lenders are now actually asking us for new business to process again their criteria have become so tight that one questions whether they do actually want it. Clients that previously would have been considered triple A rating are now considered with the same element of risk as Joe Bloggs (apologies to Mr Bloggs). There is more than one Spanish bank currently up for sale (and not expensive) and one for certain is a big name. One major institution is trying to sell all of its developer finance book to other banks at discounted prices. 

We will have this situation with mortgages in Spain for a lot lot longer than 6 months. I suspect liquidity will be an issue for 3 years or more and that assumes a strong recovery throughout Europe. If the recovery is not catalysed elsewhere, then it will be a lot longer than three years and at least 5.

TechNoApe wrote

"Smiley arranged a mortgage for us in June 2006 with GE Money and we accepted an offer of Euribor + 1.25% on a loan of 175,000€ and this month we had our review, which most banks do every six months, and our monthly repayment is only 564€. "

That seems very cheap, what period is you loan over?

lots of remortgage enquiries coming in, mainly due to being stuck on what appear to be high rates these are sadly matched my many brits defaulting due to both exchange rate and UK economic climate which isnt going to encourage spanish lenders to expand their products in line with those available in the uk.

And with the level of defaulters in Spain this is going to get worse - sadly the large majority of these are non residents as the Spanish take their mortgages much more seriously than the average Brit - the Spanish will live on bread and water rather than be late with a mortgage payment - banks here have an attitude of zero tolerance and if someone looking to remortgage to a different product that offers more favourable terms even two or three days late with a mortgage payment can influence a lenders decision to agree to the advance. If anything I think the product range is probably likely to shrink rather than improve over the forseeable future - a range that is very depleted already.