How exactly this will affect those purchasers, whose properties have no yet been built is as yet unknown.

Each phase was funded by a different bank the key banks being

• Bancaja
• CAM
• Caja Murcia
• Banco Popular

Whilst all these banks will have provided Bank Guarantees protecting clients deposit monies most phases have now fallen outside the agreed dates for evoking the guarantee so clients may have to fight through the courts to get their money back, be offered a suitable alternative or have unit finally finished by another buyer of the whole development or phase.

If the clients lawyer did not inform the client at the point the delay on build had met bank guarantee rules, the bank guarantee may now be null and void. Any clients affected should immediately contact their lawyer to discuss their particular situation. If the bank guarantee has lapsed, changing lawyer and speaking to a lawyer from who is independent may be the most appropriate solution. There are already a few lawyers looking at class action to reduce court costs to individuals and a meeting is taking place next week W/C 18/01/10 to clarify exact situation and what action can be taken by those affected.

For clients who have already completed without golf course, hotels or facilities being in place it could be a long time before these are now developed if ever.

The Polaris developments which were dreamt up in much happier times and supposed to provide self-contained holiday villages at affordable prices will sadly have turned into a nightmare for many UK clients.

Over time these issues will be resolved and one day hopefully the Polaris vision will finally live up to its expectations. For investors it could however be a long haul.

If independent legal advice is required contact heather@imsmortages.com outlining which development phase was bought and current situation along with your full contact details. Your enquiry will be passed to a lawyer already taking action on behalf of other clients.

Polaris World Go Bust! is a post from: Spanish Mortgages Experts International Mortgage Solutions

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If a bank in Spain has had to take back a unit on a large development due to non-payment of mortgage, they may consider allowing the unit to be marketed with the loan level that currently is secured against it. If the original loan was secured a couple of years ago against a higher valuation the loan level; if maintained; will currently equate to much higher percentages of purchase price now than the general market would allow for a new loan.

The units may hold developer loans where the Spanish bank committed to a loan for construction. In general, banks gave 60% of purchase price to developers to construct and it is this level 60% of previous purchase price that is secured. If the developer cannot pay the mortgage and the developer cannot sell unit at full price it is in everyone’s interest to reduce price of property but maintain mortgage level and provide access to the property to those clients who want a property in Spain but have small cash deposits or investors looking for maximum gearing.

The bank is already mortgaging the property at the level of funding being offered so this is not a new loan but an existing loan being what is called “ subrogated “ to a new mortgagee.

Subrogation apart from possibly providing much higher loan to current purchase prices also has the benefit of saving the applicant having to pay mortgage deed tax. The reason for this is that this tax was paid on this loan at its inception and is not payable again. With mortgage deed, tax at 1.8% of lending this is a significant saving.

Checking before taking an independent loan whether a more cost effective loan at higher loan to values is already secured against a property is something all buyers should make sure happens. In the UK, loans sit with individuals so you can take your mortgage from one property to another. In Spain, it is completely reversed the loan sits with the property so it is possible for a buyer to take over the loan that is already in place.

Whilst there may be some benefits of subrogating an existing Spanish Mortgage, you do have to take it over on the terms currently in place this means this solution is not always suitable and that the loan may in fact be very uncompetitive. An independent overview from an experienced broker on all options is still advisable.

Banks that have funded Polaris World include the following lenders

CAM Bank

Banco Popular

Banacaja

Banco de Valencia

Polaris World Offering 90% Spanish Mortgages For Non Residents is a post from: Spanish Mortgages Experts International Mortgage Solutions

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