Changing lenders in Spain

Re-mortages in Spain

Spanish Banks have in general withdrawn from offering re-mortgages in Spain. The reason for the withdrawal started with the need to reduce mortgage books and has continued due to concerns  of taking over another banks loans and the risk of default.

High costs

The costs of moving a loan also prevent a very active re-mortgage market.  

Mortgage deed tax which is around 1.8% of borrowings the largest cost but even if this can be avoided other costs including, bank fees, valuation fees and notary and land registry fees will total around 2% of borrowings.

Gibraltar based Banks

Some homeowners in Spain took out loans with lenders including RBS ( Nat West) Gibraltar , Jyske bank and Nordea  and completed with full term interest only mortgages for up to 15 years. At the end of those 15 years the loan had to be  repaid in full. The lack of a re-mortgage market is hitting these borrowers hard.

On a case by case basis a handful of lenders will look at taking over a loan that has to be repaid and it is one of the few circumstances where this can be considered.

Terms and conditions

Any new loan will be repayment and the new lender will insist compulsory products are taken including bank account, life cover and house insurance. Overall rates will not be as favourable as those the applicant who used Gib based banks had before.

Read the full article:-Current situation for re-mortgages in Spain

Spanish Banks assess risk of Brexit

Risk managers are cautious

Post the Brexit vote no lenders in Spain have changed their criteria for risk assessment but all risk teams have expressed some concerns.

None of the Spanish Banks want to alienate UK loan applicants as they form the largest part of their non resident market but some of the financial uncertainties have to be considered.

Currency exchange rates

Currency exchange rates are by far the biggest concern. Already we have seen a large drop in Sterling with no indication in site as to where this might level out. When assessing affordability of a Mortgage in Spain how much finally per month the loan will cost has an impact on the debt to income ratios.

If sterling continues to drop the cost of the loan each month will rise and may make it difficult for marginal applicants to support the payments going forward.

Other considerations

Other matters like the stability of the UK economy and what impact this may have on business owners and employed individuals is also of some concern to the underwriters but will not and does not have such an immediate and obvious affect as the currency fluctuations.

Commercial teams

The commercial teams of the Banks in Spain may find themselves in coming months at odds with the risk teams as one side looks to minimise possible risk and the other looks to build lending to meet the yearly budgets for non resident mortgages in Spain.

Read the full article:- Mortgages in Spain post Brexit news

Expat loans in Spain

Expat mortgages in Spain

A number of recent changes due to the credit directive in the EU and the outcome of Brexit has thrown into question the opportunity for lending facilities in Spain.

Many expats living and working outside the EU are wondering what if any borrowing they can take when buying in Spain.

The reality is that nothing has changed for the Spanish Banks at this moment in time and there are no indications that anything will.

Whilst a number of UK and Irish Banks withdrew expat loans earlier this year the facilities for a mortgage in Spain have not changed immaterial of what currency the applicant earns their income in.

Terms and conditions

Expats from countries outside the EU can expect to gain slightly lower loan to values than those based in the EU but broadly rates are the same.

For some Banks in Spain the ability to add life cover to a loan for someone outside the EU is not possible so from this point of view the applicant may actually find they have a benefit.

Document requirements 

In areas like the UAE which has no personal tax system, the level of bank statements required to prove incomes may be higher than for other applicants, covering a full 12 months. Other means to confirm debt situation in the absence of credit files will also be required. Document requirements will be different for each application.

Spain can continue to be a good half way house for expats who have no desire to retire or semi retire back to northern Europe. Climate, quality of life and cost of living will continue to be attractive.

Read the full article:-Spanish loans for expats