Posts Tagged ‘Banks In Spain’

« Older Entries

A Review Of Spanish Mortgage Lending May 2010

Thursday, May 13th, 2010

The last few weeks have seen mixed messages coming out of Spain and the Spanish Mortgage market.

Bancaja who reduced loan to values to 60% at end of last year and removed interest only have in recent days said that they can consider on a case-by-case basis up to 65% loan to value for non-residents. This relaxation is possibly in response to a collapse of their non-resident applications and reverses a trend for them of increasingly tightening criteria’s.

Deutsche bank also announced last week that they have relaxed their criteria from 50% loan to value to 60% for non-residents.

Sol Bank conversely have; whilst keeping their 70% option; increased rates. They have incorporated a first year rate of 2.75% followed by Euribor plus 1.15% this is up from the previous 0.95% above Euribor with no first year rate incorporated.

It remains the case with all the banks with the exception of Lloyds/Halifax that life insurance is being insisted on. All Spanish banks need to cross sell other products to prop up incomes and profitability and whilst it is not legal to insist on other products are now digging in their heels whenever approving a loan. Most Spanish Banks have no access to wholesale funds to provide loans so are very reliant on lending the deposits they have and profit from other income streams.  It is also still the case that even where funds come from wholesale markets the price the banks have to pay for this money and the rates they can charge leave little actual short-term profit on lending.

More and more banks are starting to offer special mortgage terms for clients buying bank stock although promotion of this remains poor except where banks are promoting the offers to Spanish Nationals.

The trend for Euribor rates last month was upward and whilst these increases are very very small we seem to have hit the bottom on the Euribors with the trend of downward movement at the very least stalling. This does not mean we will see big increases in the various Euribor rates but small and steady increase across the board during the next few months.

All in all the news is a mixed bag with some positives and some negatives. I suspect this trend will continue as each bank assesses their own current market position and balance sheet strength with no clear consensus amongst banks as to the overall way the market is moving.

Incoming search terms:

  • euribor rates for spain mortgage and review rates

Tags: Banks In Spain, Spanish Mortgages
Posted in Spanish Banks, Spanish Economy, Spanish Mortgages, Spanish Property | No Comments »

Is It Time For The Spanish Caja’s To Change?

Thursday, April 15th, 2010

This week there has been much press about the Caja’s in Spain.

Comments have come from government, analysts and the Chief Executive of Santander. All however are saying the same thing. The Caja’s must recognize and take action to bolster their liquidity and deal with their growing level of property ownership as their defaults on loans grow.

Caja’s equate to half of the financial service service providers in Spain and are unlisted businesses closest in terms of UK to building societies. Unlike building societies however which are owned by their members Caja’s are owned and run in general by political parties or regional political bodies.

Caja’s profits and policies are therefore used by the owners to enhance and finance their political agendas either at a local or national level. This means risk decisions and pricing are skewed toward political rather than business aims. Lending policy may be directed to certain groups or certain areas of funding completely at odds with what might be commercially viable but in line with gaining votes from sectors the local politicians either support or need in order to stay in power. When everything was booming no-one questioned this activity but in today’s environment the use of Caja’s to finance political agendas has become a serious problem.

Incoming search terms:

  • what is a spanish caja
  • CAM Bank Spain safe or not to invest

Tags: Banks In Spain, Spanish Banks, Spanish Property
Posted in Spanish Banks, Spanish Economy | No Comments »

Get A Mortgage In Spain With Nothing To Pay For 3 Years!

Friday, March 5th, 2010

Further to my article on the flexibility of Spanish loans where you are buying bank stock. In an effort to sell the stock held directly by the bank one lender in Spain is now offering to non-resident buyers the following mortgage facilities.

  • 80% of valuation or purchase price whichever is lower
  • 0% opening fee
  • 0% redemption penalty for first 3 years
  • Rates from 1.72%

No monthly payments for first 3 years

No interest rolled up

Terms up to 50 years to age 80

In order to qualify for the loan a property must be bought from the banks direct stock.

More information on property can be found at Your Spanish Mortgage.

Further information available from heather@imsmortgages.com

Details of an example property is shown below

Price
€ 274,100

Loan
0 € for 3 years.

Type: Studio or Apartment

  • Location: Mijas (Malaga)
  • Address: Urbanización Playa Lucera, A-32
  • Postal Code: 29650
  • Area: 158
  • Bedrooms: 2
  • Bathrooms: 2

General Characteristics

  • 158 m² penthouse in Mijas 20 km from Marbella and 14 kilometers from Fuengirola.
  • It is distributed in living room, kitchen, 2 bedrooms and 2 bathrooms.
  • The common area has a pool and landscaped garden.
  • It is located 20 meters from the sea, beachfront, located in a quiet urbanization.
  • TL4 Property Reference:
  • This housing is included in the Housing Bancaja Commitment 2010. Buy your home now and pay nothing to Bancaja for your mortgage for 3 years!.

Incoming search terms:

  • how to get a mortgage in mallorca
  • 100 mortgages in spain nothing to pay for
  • i need a 100% mortgage in mallorca
  • sotoserena estepona address
  • spanish mortgages 4 years payment free

Tags: Banks In Spain, Spanish Mortgages, Spanish Property
Posted in Spanish Banks, Spanish Mortgages, Spanish Property, Uncategorized | No Comments »

Halifax Announce Spanish Mortgage Interest Rate Changes

Wednesday, November 4th, 2009

From 9th of November Banco Halifax Hispania will be increasing margins above the Euribor which they charge clients for Spanish mortgages.

Halifax are now distinguishing not only between rates applied for interest only but also against loan size and whether 12 month or 1 month Euribor is selected.

The pricing is somewhat complicated making decision making on whether Halifax is best lender in longer term and whether the right index has been selected more difficult to make.

Interest only is now looking a lot less attractive at 2% above 1 month Euribor up from the previous 1.4%. 60 basis points is a huge jump. They remain however with Lloyds one of the few lenders offering the facility.

Other applicants most penalised by the changes are those who require loans of less than € 100.000. You will now pay 0.20% more in margin for the same loan to value if your loan is below € 100.000 rather than above.

It is expected that Lloyds will also announce the same rate margin increases as the two continue their merger activity and bring criteria unto line. It is also expected that Lloyd International the third Spanish mortgage distribution channel will fall in line on rates and criteria.

Banco Halifax and Lloyds will be very focussed next year on maximising incomes from mortgage clients and cross selling of other products will be the key focus of branch staff.

It remains to be seen how much time is dedicated to also making sure clients understand the mortgage they are taking out.

It is hoped that training for branch staff advising clients who access Halifax direct is improved from previously including their international department who most UK clients end up dealing with as getting it right and ensuring client knows exactly what they are taking has just got a whole bundle more complex.

The three year fixed rate on repayment at 3.75% is looking the best value of the portfolio.

Same fixed rate on interest only at 5.35% is looking unattractive.

At IMS we are dedicated to ensuring factual information is provided so anyone unsure of what they are being offered and whether it constitutes good advice should contact us now.

Incoming search terms:

  • spanish mortgage interest rate

Tags: Banks In Spain, Raising Finance in Spain, Spanish Mortgages
Posted in Spanish Banks, Spanish Mortgages | No Comments »

GMAC Spain Look To Close Down All Their Operations

Monday, October 26th, 2009

GMAC who two years ago withdrew their self certified product from Spain are now writing to existing clients to try and reduce their Spanish mortgage book so they can remove their administration centre from Spain in its entirety.

GMAC Spain are offering clients a reduction of 10% of the outstanding capital owed and to cover all costs of the move of the mortgage if the client can find a lender to take over the loan.

This offer provides a great alternative for any client in a position to take up GMAC’s offer. Having the capital reduced by 10% is a fantastic deal and at the same time given GMAC rates were high a lower rates could also be achieved making it a complete win, win situation.

The key issue for GMAC clients is that they probably went to GMAC because they could not evidence incomes; as no other lender allows self certified a move to another provider will only be possible if incomes; sufficient to meet the new banks criteria can now be proved. Re-mortgages are also only available at 60% of valuation and GMAC lent at the height of market at 65% loan to value.

Many self-employed clients may however have chosen GMAC as the simplest route rather than their only route and could in fact qualify for another lender; other clients circumstances may also have changed sufficiently for them to now be able to evidence the incomes they declared to GMAC allowing a move to happen.

Any clients wanting to check if they can be accommodated by another bank and take advantage of the current GAMC offer can contact us at IMS to check their overall situation and feasibility of a new lender taking over the loan.

Incoming search terms:

  • gmac spain
  • gmac
  • spanish mortgage reduction blog
  • who owns gmac spain

Tags: Banks In Spain, Spanish Banks, Spanish Mortgages
Posted in Spanish Banks, Spanish Mortgages | No Comments »

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.

Incoming search terms:

  • abbey mortgage life insurance compulsory
  • spain mortgages a life insurance
  • mortgage life insurance spain
  • mortgage life insurance compulsory
  • life insurane on mortgages in spain
  • life insurances on spanish mortgages
  • life insurance policies with spanish mortgages
  • life insurance cumpulsory for mortgages in spain
  • is life insurance compulsory for spanish mortgages
  • how to cancel life insurance in spain

Tags: Banks In Spain, Spanish Banks, Spanish Mortgages, Spanish Property
Posted in Spanish Banks, Spanish Mortgages, Spanish Property | No Comments »

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

Tags: Banks In Spain, Buying In Spain, Exchange Rates, Spanish Mortgages, Spanish Property
Posted in Spanish Banks, Spanish Mortgages, Spanish Property | No Comments »

Bank Of Spain Relaxes Rules On Bad Debt Cover

Thursday, July 16th, 2009

Finally, yesterday the Bank of Spain announced a relaxation of the rules applied to banks when they have mortgages in arrears.

Previously the level of funds a bank had to move to their balance sheet to cover bad debts was very high in comparison to the rules covering banks in other countries.

The very high level of liquid funds the banks had to send to their balance sheet made it difficult for banks to negotiate payment terms and assist clients in trouble as this was very costly for banks to provide. Allowing a client to sit 3 months arrears and then negotiate a payment plan to recoup arrears over a longer term and assist with immediate payment difficulties meant a bank had to move a very large part of the loan to its balance sheet and tie up liquid cash.

The impact of previous rules encouraged the banks to take back property and get the asset on its balance sheet rather than maintain a long-term mortgage with a client who had just short-term issues.

It is hoped that the banks will now use this relaxation of rules to be more pro-active in assisting clients with short-term problems rather than rushing straight to the courts.

We have long predicted the Bank of Spain would have to take measures and hopefully this is better late than never.

Incoming search terms:

  • debt consolidaton spain

Tags: Banks In Spain, Spanish Banks, Spanish Mortgages, Spanish Repossessions
Posted in Spanish Banks | 1 Comment »

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.

Tags: Banks In Spain, Raising Finance in Spain, Spanish Banks, Spanish Mortgages
Posted in Spanish Banks, Spanish Mortgages, Spanish Property | 1 Comment »

Changes To Spanish Property Valuation Rules

Tuesday, June 9th, 2009

In May this year, the Bank of Spain and Spanish government passed a new rule that reduces the validity of valuation reports from 6 months down to 3 months.

This change is a reflection on the volatility of values of properties in Spain and the Bank of Spain’s requirement to ensure that loans do not exceed acceptable loan to values.

No bank can now accept or complete on a Spanish Mortgage without having a formal valuation, which is less than three months old.

Timing therefore of undertaking valuations will have to be much more closely monitored to ensure completion of purchase is likely to happen within the three months or the client will suffer having to instruct and pay for another valuation.

It will be impossible to get this right every time as many issues can affect completion dates in Spain even when it appears reasonably clear completion can take place within given timescales.

The new rule should not affect valuations already undertaken as each valuation report stipulates a validity date. Certain banks however may chose to take a different view and insist a new valuation takes place if current one is more than three months old. What is in fact law and what criteria the bank then insists on does not always match.

Incoming search terms:

  • bank of spain and real estate and valuation
  • bank of spain valuation advice
  • completion dates in Spain
  • real estate valuation bank of spain
  • spain land valuation banks

Tags: Banks In Spain, Spanish Mortgages
Posted in Spanish Banks, Spanish Mortgages, Spanish Property | No Comments »

« Older Entries