What are the market conditions like in Spain for re-mortgaging, re-financing and release of equity
Since 2007 many Spanish Banks have withdrawn from providing anything other than straight forward purchase mortgages on residential properties. Despite these limitations, some options may remain. Normally release of equity itself is only considered where the funds are to be used for improvements on the property itself or to buy another property in Spain. Moving new mortgage funds out of Spain is not possible as the Spanish Banks keep control of the funds to ensure they go to their designated use.
For high net worth individuals wishing to re-finance or release funds to invest at least some Private Bank options exist as an option. In all instances it is required you are private banking client and minimum entry level is e 1m under management.
Remortgaging your property, so moving a loan to a new lender for either the current capital owed or a reduced level is only currently offered by one Banks in Spain. No lender has a standard re-mortgage product and the Banks are not focussed on this type of lending.
The only time a few more banks in Spain may consider taking on a loan is when it is currently held by another lender is where the mortgage was set up on a fixed term on interest only and the full capital must be repaid in one go. Where a mortgage holder has got to the point where the loan must be redeemed a very small handful of lenders may consider allowing the refinancing so the existing lender can be paid.
Where this is the case the applicant can expect to have to reduce the level of capital currently owed, have to move to repayment, and the costs of any move will equate to around 2% of what is borrowed. There are no specific products so any application made is dealt with very much on a case by case basis.
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Loan to Values for release of equity in Spain
Release of equity is potentially available up to 60% of the value of the property. For all lenders at the 60% level the destination of the funds will have to meet the Banks required criteria and in most instances the Bank in Spain will keep control of where and to whom the funds get paid. This is to ensure they go to their designated and agreed use. With all Spanish based lenders taking the money out of Spain after release is not allowable.
For low loan to values some of the normal rules applied can be flexed, in particular the Bank not controlling what happens to the funds.
If you are considering trying to raise funds from your Spanish property at IMS we offer a free info and approval in principle service so before you commit yourself you will know what level of funds you could raise and if any restrictions apply to what these funds are used for.
Are there any other options for raising a mortgage against my property in Spain
At this present time it is not possible to raise funds against a property in Spain other than with a Spanish bank for improvements or assistance in buying another property in Spain or a Private Bank where you can become a private banking client. Private lenders may consider this but this will always be at very high rates.
Spanish Mortgage product types for release of equity
Spanish equity release where funds are released mortgages are normally variable trackers. Most lenders link to the 12 month Euribor plus a margin above. All loans are of a repayment nature unless with a private Bank, there are no lifetime style loans available or ones with long term interest only payments.
What sort of interest rates can I expect in Spain when raising new funds
With few lenders offering the facility to release new funds, choice is limited. Where the Bank offers the option it is normally at their standard purchase mortgage pricing
Margin ranges differ from Bank to Bank, but in general you can expect to pay around 4% above the 12 month Euribor.
To find out what product what might suit you
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