Why use a broker for arranging a loan
When looking to obtain a property loan in a foreign country it can be a good idea to appoint on your behalf an experienced and professional advice company.
A good adviser can ensure you understand the idiosyncrasies of the market and that you have access to the best possible products.
One should not automatically assume that in a country like Spain the lending market works in the same way as it does in your country of residency, or that Banks are regulated in the same way and are obliged to work in the same manner as say a UK Bank when granting a Mortgage in Spain.
How Spanish Banks differ
In Spain many banks have set products but leave local management to offer terms and conditions that may vary from those outlined by Head Office. Normally this local discretion is used to charge the highest amount possible on rate rather than lowest, and in many cases branch staff do not even know what the best is that they could offer a client.
A good example of this is Sabadell who has a premier product available for purchases over € 250k. If as a direct client you walk into one branch of the Bank you may actually be offered the premier product but this product has a range of rates and you may not be offered the absolute best rate possible. If you walk into another branch of the same Bank they may not know about the premier product, or if they do, believe it is only open to EU residents not those living in the rest of world.
This lack of knowledge about product availability and no central control on terms and conditions means direct applicants often do not get offered the best possible terms the Banks in Spain can provide.
The Mortgage in Spain application process
During the application process documents provided from Spanish Bank relating to the product and risk assessment are often presented to clients in a manner that suggests an approval has been given. Applicants can be confused by the lack of clarity about where in the process an application is. In countries like the UK an approval document from a bank has some validity, applicants can assume an official looking document from the Bank means they have an offer. This is not necessarily the case. In order to have an offer the full file will have been sent to risk and a valuation undertaken, anything given before this point is meaningless.
Spanish Banks do not always work in the same way as Banks in other countries and whilst things have improved in terms of transparency, due to language barriers and assumptions applicants know how Spanish mortgages work already, it is often the case a direct applicant does not get given a full or proper understanding of what the product terms are and how a loan in Spain is secured.
Branch staff, not experienced in the paperwork that a client can provide, will often request the minimum documentation for risk assessment, this can cause a large amount of time wasting whilst the file goes backwards and forwards from Head Office to the branch with further requests or matters for clarification. A professional and experienced broker will make sure where possible the application is packaged sufficiently and all matters clarified to allow an underwrite to happen on first presentation of the file.
On average a broker will be able to get an approval within a couple of weeks of receiving a full file, a direct application often takes up to three months and can disappear into a black hole depending on the difficulty of the application and the work load of the staff member managing it. An independently appointed advice company does the chasing for the applicant and ensures that the application is dealt with quickly and effectively.
Paying for a service
When accessing the service of a mortgage advice company an upfront fee what should not be paid. All lending intermediaries are likely to have fees, but these should be payable on results not application. If an adviser is only taking a fee on the successful approval of an application there is little to lose and everything to gain by using an independent adviser to access the most suitable product for a Spanish property purchase.