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Mortgages Overseas

Mortgages in Spain

After a tough few years, the property market and in particular the mortgage availability in Spain is looking better than ever. Even more good news is that mortgages rates are also continuing to drop as the Euribor rate dips even closer to zero. Property prices are more realistic, choice is extensive and contracts are much more transparent. All this, combined with the excellent value of the pound against the euro and it is quickly becoming the perfect time for buying property in Spain.

But don’t wait until you have found a property to start looking for a mortgage. If you are serious about purchasing property in Spain then it is worth thinking about your mortgage as early as possible.

Although there is much more availability when it comes to Spanish mortgages than there was a few years ago, the process is still a long one and the lending criteria has been tightened somewhat. Having all of your finances and documentation accurate, transparent and up-to-date is vital. As experts in the Spanish property market, we are here to help ensure that you have everything you need and ultimately the best chance of securing the right mortgage for you.

 

Types of Mortgages

Spanish mortgages are offered by banks and savings banks and are obtained directly from them or alternatively, through a mortgage broker. Many of the larger banks have branches in the UK and Spain, so will be familiar to you, but this doesn’t necessarily mean that they will offer you the best rate. It’s always worth shopping around.

As with any mortgage market, the types and costs of mortgages vary greatly from cheaper, flexible mortgages to more expensive, inflexible ones. Spanish mortgages are based on the base rate set by the ECB, however lenders are relatively free to set their own charges and terms beyond that. This means a wide variety of costs and conditions to choose from.

 

Mortgage Costs

  • Stamp Duty - €2,500
  • Arrangement fees - €2,000
  • Notary - €1,000
  • Land Registry - €400
  • Life/Home Insurance - €1,000
  • Surveys - €350
  • Management - €300

*Based on a €100,000 mortgage

 

Variable and Fixed Rate Mortgages

In Spain, the majority of mortgages are variable and vary according to the ECB base rate. A less popular choice is the fixed rate mortgage (less than 3% of Spanish mortgages are fixed) which may or may not be beneficial, depending on the current interest rates.

It would be unlikely for you to be able to get an interest only mortgage in Spain today.

Rates for Spanish mortgages vary quite considerably but range from 2.5-3.5% above Euribor for variable rate mortgages.

 

Documents

When you are ready to apply for your Spanish mortgage you will need specific documentation. It is worth getting the majority of this together as soon as you can to minimise the waiting time for your mortgage.

  • Proof of UK residence – this can include a UK driving licence, council tax bill or passport.
  • Bank statements covering the last 6 months – these will be required to declare your income and outgoings over that period.
  • Wage slips for the past 3 months – If you have been working you will need to provide your 3 most recent wage slips along with your latest P60.
  • If you are self-employed – you will need to provide your accounts for the past 2 years as well as tax returns for the past 2 years and proof that you have paid your income and tax payments.
  • Additional sources of income – If you wish to borrow against these you will need to provide proof of them.
  • Pension details – Details of any pensions you are in receipt of.
  • Buy to Let property details – If you own any buy to let property you will need to provide details of any tenancy agreements.

It is worth noting that if you are applying for a Spanish mortgage you will most likely have it paid in to your account in euros. If you do not live or work in Spain then it may also be worth employing a trusted currency exchange service to help you make sense of the foreign exchange rates and ensure you get the best value for your money. We would be happy to provide you with a list of professional and reputable firms who will be able to advise you.

 

Mortgages in America

One of the largest obstacles that many investors have had to face when purchasing real estate in the US in recent years, has been the lack of mortgage options.

Since late 2007/2008, lenders have been extremely hesitant to provide finance to even the most qualified buyers. Foreign nationals found it even more difficult as most lenders viewed individuals not based in the US to be a higher risk than those domiciled in the US with a locally based credit score.

The great news for investors, especially those living within the EU and UK, is that the banks are now lending again! IHG has worked tirelessly with our banking partners to develop lending programs that not only address, but focus on the needs of investors looking to buy both holiday and investment homes in the US, but are based abroad. IHG is pleased to announce we have now signed exclusive agreements with several of the largest, and most financially stable lenders in the US. We have mortgage options available to suit nearly all of our client’s requirements, regardless of their employment status, credit history, or property investment experience. This has proved to not only be positive for our clients, but has been a major factor for the steady increase in property prices over the last 18 months.

While we have many different lending options available, we have found that the following two mortgage programs have proved to be the most popular with our clients:

BBVA

One of the largest Spanish banks in the world, BBVA offers foreign buyers a fantastic mortgage option with the backup of a world renowed banking organisation. The terms of the BBVA National Loan Programs are:

  • The terms of the IMortgage Foreign National Loan Programs are:
  • Up to 70% Loan to Value – (only 30% down from Investors)
  • Rates from 4.285% to 4.85% Fixed – (Depending on your individual circumstances)
  • 30 year fully amortized loan term – (low monthly payments)
  • Low upfront costs
  • Full Status Mortgage

PEAK Asset Lending –
www.peakassetlending.com

 

For those clients that may not be able to provide all of the documentation required for a Full Status Mortgage, but still want to take advantage of the historically low property prices, PEAK has proven to be hugely popular. PEAK focuses more on the quality of the property you are looking to purchase rather than the personal income documentation that you are able to provide. IHG has worked with PEAK for several years now and found them to be one of the most commercially minded lenders who want to hear about a client’s background, and not just the facts and figures. PEAK was one of the first lender to begin lending to Foreign National after 2007/2008 and is now one of the largest to focus predominately on investors based outside of the US.

  • The Terms of the PEAK Foreign National Loan Program are:
  • Up to 65% Loan to Value (LTV) – (depending on number of properties and location of property being purchased)
  • Rates from 8.25% – non status mortgage
  • Loan is amortized over 30 years – higher interest rates doesn’t affect your monthly payments as much as you might think
  • Non-recourse Loan – the lender is never going to come after you in the event of default
  • Non Status/Low Documentation mortgage
  • Quick closing – the loan can close in as little as 14 days

Regardless of whether you are an investor looking to purchase the ideal holiday home for you and your family, or looking to build a large portfolio on income producing investment properties, IHG, now has the mortgage solutions to maximize your investment returns. Call us to get pre-qualified today!!