01 Mar 2009 4:01 PM:
Dear Sharon, Maria and Smiley - thank you for taking the time to respond to our mortgage query. Our lawyer has also not heard of this before - perhaps it is a new lending trend in Spain! Let's hope not.
Just to clarify, we are buying an apartment on CdS and have paid 30% deposit, and our lawyer suggested we try for the developer mortgage due to the cheaper set up costs so we thought we should give this a try as our first port of call. If this did not seem suitable we planned to contact a mortgage broker in Spain for assistance. We duly emailed the bank and were given details of the mortgage on offer. We supplied all financial documentation requested and the mortgage was approved. This is going back as far as last September. Anyway, the bank said all okay to complete in February and asked us to make an appointment with a notary.
We asked our lawyer to do a final cross check of the bank fees against the fees the lawyers were charging as some of them seemed to be the same or very similar. Some of the fees were the same so some good news, the lawyer came back with a lower amount we need to pay to complete but then dropped the bombshell that the bank want to keep back 20,000 euros in a fund for 24 months. After 24months have passed apparently we can then use the money for mortgage payments and this seems quite specific - only for mortgage payments. Of course we were shocked so immediately emailed the lawyer back to say this is the first time this has been mentioned and why? He came back to us and said he thinks they wish to withhold the money in "case we go into arrears"! This makes us so cross, how can they assume we will go into arrears. They do not have a crystal ball that looks into the future (if only we all did) and if they think this then surely they should not lend us the money in the first place.
If there were no funds left over - would they do the same? Probably not.
Smiley, we did not ask for an extra 20,000 euros to cover costs - the bank told us how much the developer mortgage was and that was the amount we could borrow. I suppose we just assumed they knew there would be funds left over (actually 23,000 euros) which we, therefore, thought well okay this will to help pay towards set up costs and furnishings etc. But we don't want to have to borrow the money if we cannot use it for 24 months and pay interest to the bank in the meantime. We would rather borrow less if this is the case but they have not even mentioned borrowing less.
Maria - the developer never suggested we take out the developer mortgage so I am not sure what you mean about private purchase and financial conditions attached to the contract - it was our lawyer who suggested this option.
Or lawyer is going to contact the bank again tomorrow to find out what is going on and to tell them this has now delayed completion.
Maria - do you think we would have a case for contract cancellation?
Any advice greatly appreciated.
Thread:
Developer Mortgage Question?
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