advice needed on my mortgage

Have been reading the various post on here about mortgages but i must admit i am not the most switched on person in the world when it comes to mortgages.

I presently have my mortgage with the deusche bank in Torrevieja, and i am coming over to spain in feb to have a word with them, to see what options i have. Basically i just want a bit of breathing space to ride this period of recession through, i definately dont want to lose my property as it is my familys bolt hole and our investment for later years. But the way things are going at present my mortgage over there is costing me 770 GBP a month with exchange rates etc, which really with everything else is not sustainable with my salary.

Like i say reading other posts, i am on the 12month euribor rate so, i have had my property 2yrs in March i have seen my payments go up from 530 euros a month to, at what it is now at 770 euros a month. I understand that at the start i would of had a discount for a while and like others have said on previous posts you get a letter every year telling you what the payments are going to be for the following year.

I would therefore be very gratefull if anyone out there can tell me what options i have got, so i have a bit of a heads up when i go over to have a chat with them. Being over here in the uk you can change mortgage to get a better rate, go on interest only, to drop the payments etc etc etc.

The top and bottom  of it is, like i explained it earlier i just want to lower my monthly payments if possible and ride this period through and hope the exchange rate goes back up.

Many thanks

The touch

Hi Touch - I'm not an expert on mortgages but Smiley is and he will no doubt be able to tell you all your options - if he doesn't respond to your post you could contact him by email - I think his details are on his posts if you search for him.

You should find that your interest rate will go down substantially when your mortgage is next reviewed but check when this is - I had a 6 month special rate and then went onto annual reviews from the end of the 6 months, not from the start of the mortgage.  Also, it costs a lot of money to change your mortgage here - to go from repayment to interest only will involve huge fees and may not be worth it in the long run.

All the best.

Thanks claire

My mortgage gets reviewed in march thats why i am coming over in feb to have a word with my advisor, i will wait and see if smiley answers and hopefully he can be of help.

Do you really think it will go down substantially? that would be very good if it does.

thanks

The Touch

Hi

My question is does anyone know why it is so difficult to get a part repayment/part interest only mortgage in Spain. According to the Halifax (never again!!!) there is only the option of one or the other. There is no problem with British mortgage lenders doing this so just wondering if this is the norm in Spain and has anyone else been able to get a part/part deal?

Also Claire, you say it very expensive to revert your mortgage there. Can I ask you if it applies if you switch lenders altogether that you have to pay set up fees and new survey? Or your existing lender would charge to change it? I am very interested to know if there are other options available. Anyone had experience of good deals and who they are with?

Many Thanks

Hi Candyfloss - I'm with Bancaja and actually wanted to change from interest only to repayment and they said it would mean a completely new mortgage with all the set up fees and notary expenses - and that was with the same bank!  What they recommended was that I make payments to the balance whenever I wanted and this would not have any penalties.

Very different to the UK!!

Thanks Claire

That sounds like the same as ours. We can pay off lumpers without penalties but it has to be 10% or more. Oh well, guess that's the way it goes with Spanish mortgages

I had a long chat yesterday with Patrick of www.marbellamortgages.com (he's on the board here somewhere but I'm not sure of his user name) and I was abit shocked at the cost of buying a house here 13% of purchase price. In most countries that'd be a decent downpayment here it only gets you in the door. Anyways perhaps you could give him a ring or send him a pm he's been here along time and is very knowledgable on mortgages and such

Rob

whoops everyone beat me to it, Smiley's the man!

Patrick's user name is "Smilley".  Just do a search for him on the forum and you'll come up with many of his posts.

Touchey Turtle to answer your questions - remortgage is horrendously costly here in Spain - typically 6 to 7% of the loan size. Any benefit of a better rate than Deutsche bank would take quite a few years to justify. Annual Euribor in March (when your rate was set) was about 4.06% so a great deal will depend on what happens to rates during the next three months as to whether you see any reduction in payment - annual Euribor is currently 2.95% so assuming it stays there (likely or better) then payments should reduce for the next 12 months - while many lenders will listen to suggestions for restructuring the terms of a mortgage in the current market (6 months ago highly unlikely) I suspect that any request with Deutsche will fall on deaf ears - they have a very very conservative attitude to debt repayment (in a market that is already conservative in attitude) and are quite rigid in what they will and wont do. 

Claire I suspect that you will find that your mortgage reverts to repayment after max five years anyway - Bancaja dont have long term interest only products and never have had.

Candyfloss no such thing as part and part in Spain I am afraid - we are somewhat behind the UK - we were gaining greound quite quickly until credit crunch but that put paid to any progress and things have started to go backwards.

hope that helps all and sundry.

Thanks Smiley - you always come up with the info we need! 

Smiley, we are with Bancaja, what do you think is the best way of approaching them specifically ref re-negotiating our interest rate applied as our mortgage gone up 50% and income down 30%....??  We are not in arrears.

Hi Jewel you need to approach them and explain your situation. If you arent on interest only then ask them if they will switch to interest only (carencia). Lenders are being encouraged to try to avoid reposession as the courts do not wish to be backed up with repo hearings. Plus it is an extremely protracted process here. Explain your situation fully and advise them you dont wish to have problems or become a problem client. If they wont switch you to interest only ask them if they can extend the overall term of the loan in order to reduce monthly payments. I doubt they will reduce the chargeable interest rate but as a last resort it might be worth asking them. In order to get anywhere at all you will probably need to be assertive with them and if the first person says "no" then ask to speak to their superior and if necessary take it as far as Head Office.

Hope this helps and as I said on the other thread I am sympathetic to your plight.

Hi Guys

I really need some advice, I started a mortgage application 9 months ago now with Bancaja, I am buying my parents property in spain with a mortgage of 120,000 euros, the property value is closer to 250,000. The bank have been constantly requesting forms which I have been assured by my lawyer they now have but still the mortgage hasnt been completed. The bank have today asked if we could raise 38,000 euros to put into our spanish Bank account just for one day to allow the mortgage to go through and then we will be free to removce the funds again. is this normal? and if so why would we need to do this. I'd love somebody's advice as after 9 months I'm pulling my hair out!

Have replied to your PM

Hi Laylandiai,

I know Bancaja can be difficult but 9 months is an unbelievable amount of time for a mortgage application process!  I deal with Bancaja on a regular basis and I have never come across this situation; I would definately say it is not normal. I do know that Bancaja have 2 ways of approving a mortgage, one way is the official route via head office and the other is at branch level where they have discretion.   On the face of it you are asking for approx 50% LTV therefore within their criteria - has a valuation been done on the property?  You say that you are buying the property from your parents, is the purhhase price the same as the mortgage amount you have applied for i.e. 120,000? Could it be that they are officially only prepared to lend 70% of purchase price i.e. approx 84,000 and to actually get the approval for 120,000 you need to show you have the difference i.e. the 38,000?  Have they offered you any explanation?  Are you using a lawyer for this process?  

Thanks Sharon, (+ Smiley)

Think you may be right about the 70% of the purchase price but why have they asked me to show the 30% in my spanish account just for a period of hours, is this just a way around the system then? I'm finding it difficult to get a straight answer from Bancaja due to not responding to my emails very quickly.

The property was valued through Bancaja and valued at 250,000 euros so I really do not see what the problem is. If the above is the likely reason sharon due you think a cheque for the 30% would be acceptable in the interest of showing in the account as a 38,000 euro balance just to allow this to go through.

I doubt they will accept a cheque unless it is deposited and the funds showing as cleared balance. You should perhaps ask Bancaja for an explanation, but these days there are quite strict restrictions imposed on lenders in relation to advancing 100% of purchase contract price. The Bank of Spain requires borrowers to assume some of the burden of risk in relation to the purchase and a directive issued by the Bank of Spain is now being enforced so that the lending bank doesnt have all the risk. In your situation it is slightly different as you are looking to take something over from your parents thus in theory the element of risk has not changed - I imagine it is Bancajas way of getting around the directive as they can see that the value of the property at 250,000€ is not over inflated. You have to remember that in times gone by lenders were advancing only based on value (in contravention of the directive) - in  arising market this wasnt a problem but in a stagnant property market this very much changes the perspective and lenders have extremely harsh penalties imposed on them by the BOS if borrowers default - I suspect that many lenders would not even afford you the flexibility Bancaja are showing you in the circumstances

Hi Laylandiai,

Just clutching at straws really with my suggestion, it just does not make sense to me.  I would be wary of depositing a cheque - i am assuming we are talking a UK drawn cheque - as there will be fees in involved for receiving the cheque!