spanish mortgage?

gaynor

Hi! Has anyone had any experience of getting a mortgage in Spain? We own 2 houses, one here which is on an interest only £75000 mortgage and one in Spain, which we own outright. Would it be possible to raise some or all of the £75000 on mortgaging the house in Spain to pay off/some of the mortgage here? Heard that the rates are lower in Spain? The property in Spain is worth about £120000 and so is the property over here. We only want a mortgage over 7-10 years, thanks in advance,
Gordon

Ian_W

Left it a couple of days in case someone with more up to date knowledge posted as it's 8 + yrs since I took out a mortgage on a Spanish property and a few years since it was paid off. Two ways to go about it, IMO:
1. Borrow off a Spanish Bank, Euro interest rates are lower [though I think rising], best bet I would have thought is speak to your Bank next time you're there and/or your Fiscal Assesor. Main problem is transfering currency for the repayments, assuming your income is in Sterling, which can be expensive [currency brokers are cheaper than banks] and you're are at risk from exchange rate changes.
2. Borrow off a UK lender against the overseas property. We did it with RBOS [Gibralter] who with Abbey International were about the only UK lenders then. I know that LTSB, Barclays and probably several others will now lend overseas. You make repayments in Sterling but the loan is secured against the Spanish property.

Big drawback with both is that fees are expensive compared to a UK remortgage. The Spanish mortgage has an escitura like the property deed which has to be notarised in much the same way and you pay for the banks lawyers, notary fees and land registry, as well as your own lawyer. From memory the legals etc added about 5% on top of the normal 10% purchase costs. For this reason I don't think the concept of remortgaging works like in the UK - too expensive. Can't see any reason why an unencumbered property like yours can't be mortgaged but the costs prohibit changing regularly like people do in UK. Whichever method works best for you, do try to get a clear estimate of costs beforehand.

HTH and BoL.

EDIT: Forgot to mention, I think both ways loans are limited to 70-80% of the value of your property.

gaynor

many thanks for all your thoughts! Will have a serious think about whether it would be worth all the hassle! Thanks for giving us something to dwell on! Gaynor

Cook_County

To some degree the question also needs to consider the structure you have in place to minimise UK inheritance tax and forced heirship rules in Spain. You may wish to speak to your lawyer to ensure the assets will pass as you expect on your death, which in turn may influence the level of debt you want against each property.