International Mortgage Solutions
International Conveyancing solutions

Personal, Professional & Independent Advice.

Spain:   +34 952 459 745

Re-mortgages in Spain are different to the UK.

IMS have been placing mortgages in Spain for many years. We understand and can explain the pitfalls of moving your mortgage before it has cost you lots of time and money.

Moving lender on a regular basis to gain better rates or release equity which is standard in other countries is neither possible nor cost effective in Spain.

The drawbacks of re-mortgage in Spain

Whilst re-mortgaging with or without raising extra cash in Spain is possible often the costs of doing so far outweigh any benefit you may achieve and it is rarely the right advice for you to do so for rate benefit alone.

Because of the current increases in costs of funds for the Spanish Banks, the margins being charged on new loans are now well in excess of margins held on loans set up previously. It is not normally possible at present to improve on the rates of existing loans.

The other matter to consider when looking at feasibility of changing lender is that in Spain loans are variable trackers and most loans are also linked to an annual review. If you move your loan while Euribor rates are dropping you may link yourself into an immediately lower total rate but in fact have overall terms that are worse than your current lender. It is the margin above the relevant Euribor that is important for you to consider not the current overall rate being quoted.

There are two ways of moving your mortgage.

Subrogation

In Spain you can subrogate or transfer an existing loan to a new lender. Not all lenders will subrogate but if they do you will have to meet and follow the laid down procedure as per the government legislation of 2006. Subrogation has the benefit of reducing significantly the cost of moving by avoiding mortgage deed tax; a cost that is applicable on all new loans in Spain and equates to around 1.8% of lending. Any extra cash taken however would attract all normal costs

To avoid the mortgage deed tax the new lender must offer an improved overall interest rate (TAE) and or an extended term and then via the notary your existing bank must be given 21 days to match the new terms or release you. Movement of the loan to interest only, extra cash out or any other features being provided do not constitute reasons for subrogation being allowed and therefore the mortgage deed tax saving. Your existing bank can match interest rate but refuse to meet any other features to force the subrogation process to be stopped. Whilst you save on mortgage deed tax you will incur some other normal costs of mortgage arrangement. These may include a valuation fee, a bank arrangement fee and notary and land registry costs. If the new bank does not cover or contribute to these costs you can expect them to total to round 2% of your loan amount and will have to be covered by you or added to new loan if loan to values allow.

New mortgage

The second means of re-mortgaging is straight forward closure of one loan and inception of a new one. In this instance you have no government process to follow and are free to leave your existing lender at will but all costs of moving the mortgage including mortgage deed tax will apply. In total these costs will be around 4% of lendingThe second means of re-mortgaging is straight forward closure of one loan and inception of a new one. In this instance you have no government process to follow and are free to leave your existing lender at will but all costs of moving the mortgage including mortgage deed tax will apply. In total these costs will be around 4% of lending

Maximum loan to values on standard re-mortgages will be 65% for non residents and 80% for residents of Spain

Warning

Beware any brokers that do not explain the costs associated with re-mortgages as they do exist and in the final analysis will be deducted from loan amount at completion.

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Spain: +34 952 45 97 45 | Fax: +34 952 45 97 42

International Mortgage Solutions, Lista de Correos, C.P 29110, Monda Malaga

International Mortgage Solutions guarantee the following:
Neither your personal financial details or other personal information sent for a mortgage enquiry or application
will at any time be passed to or sold to any third party for data base marketing purposes or any other reason.
Information in relation to a full mortgage application will only be passed to the bank or relevant banks to which we are making an application.

Please note that all UK mortgage enquiries are passed with the clients permission to an authorised independent UK broker.
We do not advise on or arrange UK loans directly ourselves as we are not FSA regulated to do so.