Understanding re-mortgages in Spain with or without extra funds

Remortgages in Spain is different to other countries

IMS have been placing mortgages in Spain for many years. We understand and can explain the pitfalls of remortgages in Spain. Before it has cost you lots of wasted time and money.

Moving lender on a regular basis to gain better rates or release equity, Standard in other countries is often not possible nor cost effective in Spain.

Remortgage lenders


Buying out an existing owner

If you own a property jointly with another person. Wish to buy them out gaining some lending on a Mortgage in Spain to buy their share is possible. Generally speaking you can be offered up to 70% of  the cost of the buy out. This means you will need to find the 30%, plus costs of transfer yourself.

Removing a second person from the purchase deed is not as simple as it is in other countries. You will pay transfer tax on the amount you are paying for the benefit of taking over 100% ownership.

If the property does not have a loan already then the Banks in Spain may offer a Mortgage in Spain at the 70% of cost. In order to help you take over the property. There are no set products and each application is reviewed on its now merit.

If a mortgage is already jointly held, it is less likely a new lender will re-mortgage the property. Allow for the current loan to be paid off.  Neither raise extra funds. If this is the situation it is best to talk to the existing lender, rather than looking for a new Bank.

In the case of divorce where there is a court order in the country of residency the Banks may consider a re-mortgage in Spain. Therefore allow for new funds to meet the court order.

What are the drawbacks of a re-mortgage in Spain

Whilst re-mortgaging, with or without raising extra cash in Spain has in the past been possible often the costs of doing so far outweighed any benefit. Moreover was rarely the right advice for you to do so for rate benefit alone.

For many years because of the increases in costs of funds for the Spanish Banks, margins charged on new loans are normally in excess of margins on loans set up previously. In recent years this has changed somewhat. From 2018 it became more likely some kind of saving could be achieved. The key issue was the Spanish lenders lack of desire to offer them.

With the growth of fixed rate products. Because fixed rate products are very competitive. More and more mortgagees are looking to see if they can move their existing loan. From 2020 one lender started to actively seek re-mortgages. This has been added to in 2021 by another lender.

A new streamlined process to allow a borrower to ascertain whether moving a loan is cost effective has been launched.

When can I take out extra funds in Spain

Currently it is very difficult to refinance in Spain and take extra funds. Spanish Banks are only providing this facility for home improvements. Alternatively for buying another property in Spain. This is not an area like the Banks are currently looking to provide service. For specific clients in certain circumstances something may be possible. However moving funds outside Spain will not be possible.

Taking finance on an already owned property is only possible even when the funds are for improvements of the property. Also is owned with no current Liens. If a mortgage is already secured then the applicants only option would be to see if their existing lender would allow for a further advance.

To check suitability of a remortgage email us today on info@imsmortgages.com with an overview of your situation.

Why are Spanish Banks not offering remortgages in Spain

Spanish Banks are focused on mortgages for purchases and most Banks are not currently offering any type of remortgage facilities.

Since 2020 one lender has decided to to put some focus on re-mortgages. Offering a variable rate product at 1.95% above Euribor. However with no requirement for ancillary products. For instance like life cover.

Remortgages may be considered if the client has an old interest only mortgage. Moreover where the facility is coming to the end. In the event capital must be paid back.

These type of loans were granted in the past by RBS/Nat West. Leeds and Holdback. Jyske Bank and on some occasions Barclays. Because none of these lenders are offering Spanish Mortgages any more, or in the case of Barclays have been bought out in Spain. Existing lender cannot offer a solution. Mortgagees that expected to extend the loan are unable to.

No lenders in Spain have specific products for remortgages in Spain. However some will consider an application on a case by case basis. Maximum loan to value is likely to be 60%. In general where granted the new Bank does expect the loan capital to be reduced. No extra funds would be granted. Unless for refurbishment.

What is the process for remortgages in Spain

It is important if considering moving your mortgage to another Spanish Bank that you understand on what basis you could make the move. Dictated by legislation. A loan can be moved two ways.

Subrogation moving existing Spanish Mortgage to a new lender

In Spain you can subrogate or transfer an existing loan to a new lender. Not all lenders will subrogate but if they do they will have to meet and follow the laid down procedure as per the government legislation of 2019. Subrogation used to have the benefit of reducing significantly the cost of moving by avoiding mortgage deed tax; a cost that was applicable on all new loans in Spain, and equated to around 1.8% of lending. AJD tax cannot be passed by a main stream Spanish lender to the client. Cost of the deed can be. However any new funds would attract all normal costs.

What are the rules for subrogation of a Spanish Loan

Rules on subrogation changed with the regulation of 2019. If a bank offers remortgages the costs have been reduced. Now solely arrangement fee, Notary and land registry fees apply,

Setting up a new Spanish mortgage with a new lender

The second means of remortgages in Spain is straight forward closure of one loan and inception of a new one. It would no be cost effective to do this in comparison to subrogation.

What cost do apply when moving undertaking remortgages in Spain via subrogation rules

What are the normal costs of mortgage arrangement. These may include a valuation fee, a bank arrangement fee and notary and land registry costs. New lenders do not cover or contribute to the costs. Therefore you can expect to pay around 2% of your loan amount. These funds must come from you.

What are the costs of setting up a new Spanish loan

In total these costs will be around 2% of lending This second means of re-mortgaging is straight forward closure of one loan and inception of a new one which since new regulation of 2019 is now not advisable as Spanish Banks cannot stop you leaving.

What are the current maximum loan to values available for a re-mortgage in Spain

Maximum loan to values, when available on standard remortgages in Spain will be 70% for non residents and 80% for residents of Spain.