Hi,

I have been doing research on mortgages and from what I can gather a foreign national can only get a mortgage in spain of up to 70%. Realistically to purchase a home you would need around 40% of the property value when you include the tax and fees etc which is out of my reach at present.

I know in the UK you can usually raise 90% but looking at products they offer for places abroad I’ve only found about 70% again. Is there any products or alternatives out there? I have money saved up and don’t want to waste money on renting for a long while and also feel its a good time to buy with the dip in the market. Would appreciate any thoughts.

Cheers
Brian

Brian welcome to the forum and read very good post , walking you self in to what i call very hight mortgage 70% i do think we got 16 - 18 months left in this turn down befor the market turn and again you wont see price hike up fast so looking at 3 - 5 years on top .

now deppend on where you want to buy there are ” Estate agents, ” that think we are all millionairs in spain are the people that come for outher places have big suit case off CASH

the Englishs Germany agents will try to over charge you (not all but most off them ) try spanish aswell
where you looking and many be able to give few names of real Estate agents that call help you out

any more help
jurdy

Where are you looking?  If you’re in a big city - well, maybe we are close to the turning point and prices will go up again soon, at least if you buy in an up-and-coming neighbourhood, although nobody really knows.  If you’re in a resort area where there’s been a lot of development already, then I think there’s a very high chance you’ll continue to lose value.  And if you get a big mortgage, that will leave you with negative equity.

Why don’t you consider doing an old property up?  That way you should be able to get a mortgage based on the finished value, not the price you pay.  The bank may not release the money until the restoration is complete or nearly complete, however, so you will need money to buy the wreck and a first instalment for the builder to get working, but you could do that with a short-term loan repaid from the eventual mortgage.  Can be done, though - I did, and on paper I more than doubled my investment, so I’d be eligible for a mortgage of about 140% of what I paid, if I needed it. In reality we probably couldn’t sell it now, but the bank goes on the tasacion, not on the likelihood of realising the value.

Hi Brian. Sorry but it seems you picked the worst period to get a mortage in Spain. Until 2 years ago banks offered mortages for 100% (and more) of the property value ... now things have changed. With a 10,5% of unemployed, and expecting it to raise up to 12% or more during 2009, banks are not willing to risk. As a matter of fact they already have an awful lot of properties which they’re unable to sell for lack of demand.

In Spain there are no rules for estate agents ... they can do almost whatever they like. In 2001, when I was looking for a ‘home’, I remember being showed the same flat by 3 different estate agents: price varied from 90.000 to 105.000 euros ... The only existing rule is that selling price must not be less than the land value (which is shown in the annual IBI - Local Property Tax) multiplied for a rate that Hacienda establish at the beginning of the year. For example: I live in Alicante and this year’s rate is 3,09% (therefore if the land value was 50.000 euros, the minimum selling price mentioned on the escritura (title deed) should be at least a bit higher than 155.000 euros, to prevent Hacienda from charging you a huge fine). Any increase from that price is due to market value and estate agent commission, which in Spain should be 3% but can easily reach 5% or more. The problem is that such commission is usually included in the final price, so that it’s very difficult to find out how much they are really charging you. An estate agent once happily told me that he had sold for 102.000 euros a flat for which the owner wanted 87.000 euros. This spanish estate agent gained nearly 15% on that sale ... 😖

When I bought my flat I asked the bank manager to tell me if he knew of anybody who needed to sell. He put me in touch with one of his friends, who was estate agent. I ended up buying a very central and big flat and paid for it only 12.000 euros more than the minimum required by Hacienda, meaning 35% less than the market value at that time. It was what they call here a chollo (very good bargain) but I had to wait a long year before I found what I wanted and at a proper price. What I mean is that if I were you I wouldn’t be in such a hurry. Spanish economy is due to get worse during next year, lots of people, including foreigners, want to sell their propery, and if you take your time you too might be able to find a ‘chollo’. And with what you’ll save up, you’ll probably be able to afford the mortage, even if only for 70% (but some banks still offer up to 80%) of the property value ...

Thanks for the advice everyone, with the events of the last couple of days don’t think there will be an upturn soon.

The best deals on offer today are certainly not as good as those around two or three months ago and also more and more lenders are tightening up on lending for new-build flats. The maximum LTV is often lower for these, however one or two lenders will not lend at all on new-build flats to buy-to-let investors.
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maria