Mortgages and Money Exchange in Spain

 

Villa España ­Money matters made simple

 

 

Mike Boles, director of broker Savills Private Finance and head of its interational divivision, says: "The euro looks relatively cheap at the moment. Euribor - The European interest rate - is currently hovering around two per cent., compared to the Bank of England base rate at + 75 per cent, so you´ll pay less interest than on a sterling mortgage. Variable rates in Spain start at 3,25 per cent and, while rates are low, they are forecast to remain at this level for some time.

"A euro mortgage makes sense, particulary if you plan to rent the property, as the rent is likely to be paid in local currency. But there are some pitfalls with a euro mortgage. it´s remarkably difficult to remortgage and raise capital outside the UK. The self-employed will also find it difficult to get a euro mortgage unless they use a good broker because oversea lenders aren´t as understanding in their attitude towards income status and self-certification isn`t available, again unless you use a broker.

"Overseas lenders also have extremely strict requirements regarding proof of income earned income, pensions, investment and rental income can all be taken into account. The lender will also want details of the borrower´s outgoings to ensure they can afford to service the loanand aren+t already over-commited." In most cases, you will need a deposit of at least 15-20 per cent of the property`s value, says Mr. Boles.

The time over which the mortgage can be taken is different to the UK too, which soem lenders prepared to consider terms ranging from five to 30 or even 35 years, and in some cases it is possible to take the mortgage until you are 70. In the UK, most lenders will not take your mortgages past the statutory retirement age of 65. A number of British lenders will offer mortgages in Spain, including Halifax through Banco Halifax Hispania, norwich / Petersborough Building Society and Barclays. One of the advantages of using a British lender is that you know you will be dealing with English speakers, which is essential if you are not fluent in Spanish. it will also give you access to experts in the area you wish to buy.

Ian Smith head of European Operations at Halifax ple, says: "BHH has an approved panel of qualified solicitors and surveyors in the popular Costa del Sol and Costa Blanca regions. These solicitors and surveyors have local knowledge and experience of acting for British customers.

There are certainly slight procedural differences and different jargon, such as evalutors rather than surveyors. However as long as care is taken over the choice of bank and some initial checks carried out, such as the bank´s ability to deal with British residents in English, all these differences are capable of being explained."