Archive for the ‘Spanish Property’ Category

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Need A Hacienda San Cayetano Development Mortgage?

Monday, October 19th, 2009

Clients completing on the Hacienda San Cayetano Development in Costa Calida, Murcia are now being contacted with completion dates.

The development was not funded by a bank so no developer’s mortgage is available which means clients requiring mortgages will need to shop around for their financial needs and arrange independent loans.

If necessary to allow this to happen clients may need to delay anticipated completion and negotiate with the developer for a little more time.

It is hoped the developer will be reasonable in allowing this extra given the complete change in mortgage availability in comparison to when most clients made a decision to buy.

For information on what lending facilities could be obtained and information on how to try to get an extension on completion date contact IMS now.

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CAM Bank Spain Sends Out Threatening Letters To Clients In Mortgage Arrears

Friday, October 16th, 2009

A number of clients who currently hold CAM bank mortgages and are in arrears have recently received letters in the UK from a lawyer firm telling clients that should they fail to bring the mortgage up to date it is possible CAM Bank may pursue assets in the UK.

Whilst clearly the bank has the right to try in anyway they see fit to ensure the mortgage arrears are cleared these tactics; without also offering workable payments solutions for clients in difficulties; is harsh and possibly misleading.

Whilst it is true that ultimately should they be left with an outstanding debt CAM can technically look to the UK to recover money (so no client should ignore the possibility) the process and facts are less black and white.

Firstly, the process of repossessing the property would have to happen and then the property would have to be sold to crystallise the actual debt outstanding. This can take years.

Secondly, whilst it may be true that in its distressed state the property will not reach the amount outstanding; to pursue a UK residents assets to fill this shortfall would require UK court action.

Logic says that unless the bank is clear the client has sufficient net asset wealth in the UK; where another lender does not already have a first charge; and that the loan level outstanding is sufficiently high enough to make the cost and time of going through UK courts worthwhile even CAM bank will not add to their woes by pursuing further small outstanding amounts through a long legal process in the UK.

It would also be difficult although not impossible to see a UK court agreeing to their action when most clients have had little or no advice upfront into exactly what they were signing at outset and where the bank took no steps to ensure this was the case. CAM rarely or never offer workable solutions to clients to assist in keeping up payments like offering a term of interest only, a minimum payment for an agreed set time’ or a payment holiday as would be expected of UK lender which again would not work in their favour.

In the UK lenders are expected to have demonstrated they have done everything within their power to avoid getting to the point of court action and are heavily criticised if this is not the case.

CAM’s solution to their own problem; which has occurred because they of all banks in Spain took on risky non resident lending at high loan to purchase prices, undertook poor due diligence on documentation and left many lending decisions in the hands of branch managers who were only targeted on sales is to threaten rather than negotiate and worse than that threaten something that they know will cause severe stress and concern to their clients but in reality is unlikely action they will take.

Of all the enquiries, we get for re-mortgages 75% of them come from existing CAM bank mortgagees which sums up how poor across all elements of customer service CAM is.

My advice would be do not ignore the letter and take your own legal advice immediately if you are in arrears.

If you are not in arrears but fed up with CAM’s lack of service look to change to another lender where costs of move are covered; like the Halifax Switch and Save.

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Spanish Banks Adding Compulsory Products To Mortgage Terms

Friday, October 16th, 2009

Increasingly all banks in Spain have been adding compulsory and for them profitable products to their mortgage offers.

It is in fact not legal in Spain for the banks to tie clients into products outside buildings insurance and a bank account unless the client gains a rate benefit for doing so. This seems to however be making no difference to the banks insisting on clients taking up; in particular life insurance; for the benefit of having a loan.

Where a bank links the rate or margin above Euribor to the taking of a specific product this will be written into the mortgage deed and should you cancel the linked product during lifetime of loan a new higher rate will automatically be applied. Whilst having the reduced rate may appear attractive, the cost of the linked product each month needs to be added to the monthly payments and often makes the overall terms more expensive than a higher rate without. If life insurance is required by the you this is of course not an extra cost and the lower rate may be of benefit but if life insurance is not necessary then this is just another sum of money on top of costs expected.

For banks that do not provide a specific rate linked to products; to gain an approval clients may however still find themselves being blackmailed into taking an insurance policy just to get an offer. Whilst it is not legal to insist a client takes the product a bank can of course reject an application without giving rationale so playing the game to get an approval is the pragmatic approach most clients will take.

Under this scenario however whilst the client may have to sign up for life insurance in year 1 the insurance requirement cannot be embedded in the mortgage deed and if the client cancels policy after year 1 there is absolutely nothing a bank can do to force client to take it in subsequent years.

Because of the cost of extracting yourself from Spanish mortgage terms at a later date; it is important to check if life insurance is being stated as compulsory for an offer of lending and whether this is going to be written into mortgage deed and linked to a rate or not. You can then assess what level of flexibility to dispense with the insurance cover at a later date you may have.

The poor behaviours of banks who are taking advantage of the overall difficulties in the worldwide lending market to force clients into taking other products immaterial of whether they are required or not is extremely frustrating. The law, which should assist to stop this happening, is toothless because it only relates to a completion and ability to place requirement in a mortgage deed; banks can do what they like when deciding whether to complete on a particular application. One lender in Spain “Bancaja” have a central risk department team that underwrite and approve an applications but the branch managers of the local branches who have the final say can, and often do, refuse to complete unless life insurance is added so if you want the loan you have to sign up or go without the mortgage even though you fit bank criteria.

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How to avoid the current poor exchange rates when buying in Spain.

Wednesday, October 14th, 2009

Whilst many bargains exist in Spain low exchange rates are negating some of these benefits.

Many cash buyers are torn between accessing property at low purchase prices versus the real cost given current Sterling to Euro rates.

Whilst setting up a Spanish euro mortgage to overcome this is one solution many buyers are put off by the costs of setting up a mortgage for what is expected to be a short to medium timescale. Spanish mortgage costs for those clients who know the requirement is only temporary can be prohibitive.

There is now a product available that allows cash buyers in Spain to maintain their funds on deposit in sterling and against the security of funds obtain a credit line in Euros that can be used to complete the purchase. Because a credit line rather than a Spanish mortgage is set up, costs like mortgage deed tax, and valuation fee are avoided.

The deposited funds can be placed in a range of guaranteed capital accounts dependant on clients preference. With the right selection of deposit or bond account, the interest rate difference between the rate charged on the credit line and the rate paid on the deposited funds can be as low as 2% which is in line or below current mortgage rates.

Cash held in sterling by the bank must exceed the credit line facility level to cover risk of further exchange fluctuations but with an insurance policy taken by client the bank can provide up to 90% of the sterling equivalent in Euros.

For clients who are not pure cash buyers and require up to a 50% mortgage the bank can satisfy both requirements. Provide up to 50% on a mortgage using property as security and provide a cash line against the deposit monies for the rest of the funds required for completion. This means even for buyers who are not complete cash buyers the ability to not change up sterling to Euros in current financial environment can be 100% avoided.

For further information, contact us now.

www.imsmortgages.com

heather@imsmortgages.com

+ 34 952 45 97 45

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A Refreshing Change: An Ethical Spanish Property Developer

Thursday, October 8th, 2009

Whilst many buyers in Spain are currently price and discount focussed when looking for a distressed or discounted property other considerations should be taken into account.

If you buy a property that forms part of a large development with many vacant units you may get it at a very good price but what are the longer-term realities?

Firstly, all apartment blocks need maintenance and this maintenance is paid for by the owners. Do not expect a bank selling a distressed property who also owns all other uninhabited apartments in your block to stump anything  toward these maintenance costs it just will not happen. This means that the overall maintenance of your complex over time will deteriorate until all units are filled and a community of owners created.

If electric and services are being supplied still via the current owners who maybe the banks again if they stop paying their share it could adversely affect you.

There is still a lot to be said for serious buyers to consider buying in developments where the original builder is committed in the long term to the project rather than offloading as much of it and any of it as quickly as they can.

Never has this been more highlighted than when I recently visited Samara Resort Marbella,  a development of the Hines group. Hines amazingly enough and unheard of in my experience when it became clear the urban issues in Marbella meant no development could be sure their development would finally receive a first habitation licence immediately offered to refund staged payments already made by buyers. More than this unlike other developers they refused to market the properties at all until the first licence was obtained and legally correct and development was fully finished. This delayed sale of any property for 2 years.

This level of ethics is rarely seen in Spain. Hines fully completed their luxury development with no contribution of monies from buyers buying off plan. Hines now pays the community fees proportionally to the unsold units and will continue to do so until all units are sold ensuring anyone who buys now does not end up surrounded by something that looks more like Beirut than a luxury complex.

There are developments ,on the other hand where a communal heating and air conditioning system is in place has left those few owners who have moved in with neither of the above due to the developer starting to not supporting his share for unsold units.

Hines are not heavily discounting their units as are some but for buyers wanting a high quality property built by a company who has 100% committed to keeping to their ethical business beliefs and supporting their brand; despite the fact that clearly means it is currently costing them money and eating heavily into profits not yet made; they can be highly recommended.

A superb development operating with transparency and a genuine care of their clients

There would be no requirement for programmes like Paradise Lost if all businesses had taken the same approach and many of the issues Spain now has would never have happened.

My faith in human nature is restored.

www.samaramarbella.com

www.hines.com

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Good news for Scandinavian buyers wanting a Mortgage in Spain

Monday, September 28th, 2009

Recent articles suggest Scandinavian buyers are active in Spain taking advantage of low prices and the fact their own economies are holding up better than most.

The other good news for these buyers is that unlike their European counterparts they have access to Spanish Mortgages via a Scandinavian bank whose loan to values have stayed at 80%, have low bank arrangement fees, very competitive rates and offer interest only up to 10 years.

This bank allows purchases to be made in personal or an SL company and will lend to nationals from Sweden, Norway and Denmark wherever they are resident in the world or non nationals who are tax payers in any of the three Scandinavian countries.

These lending facilities are far better than any Spanish bank or UK linked bank can offer and very good news for Scandinavian clients.

For Spanish estate agents with access to the Scandinavian buying market; ability for their clients where finance is required to purchase and take advantage of the current pricing opportunities is much higher than for clients of other countries.

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Low Rate Spanish Mortgages – Too Good To Be True?

Monday, September 28th, 2009

For sometime now I have been asked by clients what I know of the Japanese Yen mortgages being offered in Spain.

I have now been trying for some weeks to understand how this offer is being made and how real the offer is.

My initial concerns about its validity purely stem from the fact that major well known names like Lloyds international have withdrawn from offering Yen mortgages unless you are paid in Yen. Their key rationale for this has been it is unprofitable business for the bank. If Lloyds could not make it pay on 1.75% to 2% above base rate I cannot see how the loans apparently supplied by Dominion Credit and Finance in Singapore can make it pay at 1.5% above base and cover all legal costs for clients as well as offer free exchange management and advice.

However undeterred I have continued to investigate the possibilities.

The credit agreement that is required to be signed for this type of loan is very woolly. It seems to give the lender ability at any time to change terms and rates with little or no notice and there is no guarantee what you sign for will end up being the actual terms for lifetime of loan. The MD a Mr Henry Braithwaite has yet to respond to my email asking searching and probing questions about their loans as he is away in New York. Clearly on a long trip.

Dominion credit and finance website is very new, the company can be found in no directories for business in Singapore and they do not seem to exist at the address given or at least I can’t find them.

Mr Henry Braithwaite who has a very strong banking background according to his own information is unknown to a senior banker I know who worked and lived in Singapore for many years. He will not have known everyone to be fair but banking circles tend to be quite tight.

The product is being offered via “Low Rate Spanish Mortgage” website where along with getting your mortgage you can also enter a draw to win the MD’s villa in Mexico. Tickets are € 25 a pop. It is a spot the ball not a draw and none of the accepted competition rules that are a legal requirement are in evidence. Naughty Google are allowing therefore a completely non-legal competition to be advertised because the company are not in fact paying to market the competition but paying to market Spanish mortgages.

Recently offering to arrange UK mortgages has been added to Low Rate Spanish Mortgage website again promoting rate and UK mortgage advice is actually not allowed under FSA rules unless you are a regulated adviser. Do Google do no checks !

I still have no idea if there is a catch or how they expect to make money or if the deal is in fact real all I can say is approach any contact and offer with a great deal of scepticism and take legal advice on what you are possibly signing up for before the passing of any monies or any commitment is made.

Posted in Spanish Banks, Spanish Mortgages, Spanish Property | 2 Comments »

John Howell Associates Closing 10th July

Tuesday, June 30th, 2009

Following on from rather gloomy news last week about Leeds and Holbeck and the continuing pressures on the Spanish mortgage and property market and the international  market in general John Howell Associates one of the leading international but UK based legal firms has announced it is to close from the 10th July. Whilst covering other countries John Howell’s biggest, market was Spain

John Howell states that to cash flow business; given a 75% drop in incomes expected; he put in £ 100k of his own money last year and clearly cannot commercially sustain this until the market recovers.

There are signs of recovery in the purchase market with higher levels of property in Spain being sold in the last few weeks but recovery is slow and will take time; for some firms the recovery will come too late.

Although recovery of the overseas market would be greatly enhanced if lending was more readily available for the right clients and those willing to use larger sums of their own money a mortgage should still be possible and bargains are widely available.

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Leeds and Holbeck Effective Withdrawl From Spanish Mortgage Market

Wednesday, June 24th, 2009

Yesterday afternoon with no prior notice or indication Leeds and Holbeck in all but name withdrew themselves from the Spanish mortgage market.

Drastic changes to criteria have put Leeds and Holbeck products completely out of the market.

Ages have been reduced from maximum age 80 years to age 65 years.
All interest only facilities have been withdrawn.
Income multipliers have been slashed and further restrictions placed on what type of property they will lend on.

Of great concern to most brokers will be the lack of communication prior to change and the decision to not just change product but to do so as of yesterday when communication only came out late yesterday afternoon.

All brokers have been given until Friday if they have an approval in principle to get a fully packaged case to Leeds or approval is lost.  A challenge in itself; any cases where the society has not given an approval are affected immediately.

In their communication, they completely ignored the situation they may have put brokers and clients in. No apology for the necessity of the change and no regard or apology for the inconvenience (to say the least) they may have caused those business and clients who have supported them.

One can only assume from the action taken serious issues are afoot for Leeds and Holbeck as any mutual building society dedicated; as they claim to be to service; would not make these changes immediately without giving time for pending applications to be sorted unless things were dire.

It is either there are real problems here or their claim to quality service for all is in fact just lip service and their ability to communicate effectively with third parties non-existent.

“Just another example of banks disregard for clients and businesses or testing times ahead for one of the few UK mutuals left. Time will tell.”

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ITV 1's Paradise Lost – Good Mortgage Advice Would Have Helped

Monday, June 22nd, 2009

This weeks Spain “Paradise Lost” programme on ITV 1 was an overview of the market in Spain both now and in the preceeding years.

It is difficult when watching a programme like this not feel sorry for some of the individuals involved but for all those involved the issues need never have happened with correct advice. It would have been very helpful if the documentary had outlined on each case study what the actual steps should have been taken and what can be done by buyers wanting to buy in Spain to ensure they do not find themselves in the same situation.

The buyers who bought at La Zenia Elite made a number of errors or were badly advised by their legal advisers. Protection against exactly what happened to them is in place in Spain and is robust and legal. Failure to follow simple rules are what caused the outcome they have. If you are buying off plan in Spain by law the developer must have a bank guarantee. The bank guarantee, guarantees the deposits of the buyers should the developer fail to complete build or go bust. Each development should be able to produce a bank guarantee certificate which clearly stipulates; the terms of the bank guarantee; when it can be invoked and under what circumstances. It will also outline what interest rate compensation would be payable on funds tied up as deposits. If this certificate is not available, visible and terms not understood then deposits should not be passed. If the certificate is in place, is understandable and it’s terms are acceptable then deposits can be safely passed as a bank is underwriting the cash.

Secondly, a development is only complete when the whole development or that phase has what is called a habitation licence. This licence is another legal obligation and is confirmation that all works as per the licences originally granted have been finished and that the property meets the legal standards required. Without this licence it will not be possible to get direct mains water, electricity etc connected to individual properties so anybody moving in before it has been issued will rely on developers utilities. The habitation licence may take some weeks to be granted and people do get talked into completing before the certificate is issued by Town Hall. Passing over full funds and completing at Notary before it is issued is one of the most common mistakes made and under no circumstances should a buyer do so.

Legally they cannot be forced to complete whatever pressure they are put under by the developer or seller without this document. Legally the document confirms all works are completed to the standard required. Without this licence at any time the property could be deemed as built illegally, not meeting the original plans that permissions were granted under and getting utilities connected may be impossible. With it you are safe.

The same applies to re-sales if it does not have an actual certificate available even on older properties take great care and ensure property is not only registered locally but forms part of the Junta’s and national current 5 year urbanised plan known as the PGOU. All buyers should read the small print on any marketing material as all developments only require the developer to finish and complete the buildings for living no contract ever requires the developer to complete any additional infrastructure including club houses, golf courses, health clubs gardens etc.

All buyers should take this account when deciding to buy as if not having the golf course would mean you would not buy don’t buy because there is no guarantee or obligation for it to be provided by law. If the golf course is a specific requirement and what makes the property appealing buy a property where the golf course is completed not in the planning stages.

It would be very helpful both for buyers and the total market if along with the headline horror stories these type of documentaries helped educate people how to take all precautionary steps they can and how to understand the actual remaining risks they may be taking. Most things in life are a risk but taking an informed risk is a completely different ball game to taking an uninformed risk.

It is not true and has never been true that banks accepted mortgage applications if you “ had a pulse and a passport”. When I started arranging mortgages in Spain some years ago it was true that the banks did less checks than now but the real issue has been the exodus of brokers from the UK seeing Spain as a good place to earn a quick buck without regulation who convinced clients to falsify papers, take loans they could not afford or use dodgy valuations to get in mortgage funds for more than the property was worth. These activities have sent the finance market in Spain for genuine buyers into turmoil making any application now very difficult to obtain. This is due to a high delinquency rate of mortgages with clients who have no embedded interest in the property in terms of their own cash and properties worth less than the mortgage amount. The banks in Spain are now so pedantic on applications that arranging a mortgage has become an unnecessarily onerous task even for quality clients.

Taking a mortgage in Spain is different to UK the whole process from application through to securitisation does not reflect the UK. Again many clients have fallen foul because they have either made big assumptions of how it will work or have been badly advised or have gone to banks direct who do not explain clearly or in English exactly how the mortgage will work in the longer term. In fact again the Spanish Mortgage market is clear, understandable and its idiosyncrasies known to any broker who is experienced and takes the time to protect the client fully. This means just like the UK the broker should take into account the legal issues surrounding buying a property, land classifications and be able to explain to the client fully the implications of any actions they are planning to take.

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