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 in Spain on a regular basis to gain better rates, or release equity, standard practice in other countries, is normally not possible nor cost effective.

Buying out an existing owner with a Spanish mortgage

If a property is owned jointly it may be necessary to buy out the other party. This can happen in the instance of divorce and or incapacity of the other owner. If you own a property jointly with another person and wish to buy them out with a Mortgage in Spain, some level of funding can be possible .

  • Generally speaking you can be offered up to 70% of the cost of the buyout. 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, 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 and where there is a court order in the country of residency, Banks may consider a remortgage in Spain. Therefore allow for new funds to meet the court order.

What are the potential drawbacks of a remortgage in Spain

Remortgaging in Spain does form part of the active lending market. Whilst in other countries considering a remortgage is a normal process during the life of a loan, in Spain its not. Many restrictions apply. Few lenders offer the facility.

  • Remortgaging, with or without raising extra cash in Spain is rarely cost effective.
  • The cost of doing often outweighs any benefit on rate
  • Because of the increases in costs of funds for the Spanish Banks, margins charged on new mortgages are often in excess of margins on Spanish mortgages set up previously.

When can I take out extra funds in Spain

Only in very limited circumstances will you be able to raise funds from your property in Spain. Money laundering restrictions applied by the Bank of Spain, make it difficult for funds to be taken out of the country.

  • Currently it is very difficult to refinance a mortgage in Spain and take extra funds.
  • Spanish Banks are only providing this facility for home improvements. Alternatively for buying another property in Spain.
  • Remortgaging of non resident loans is not an area the Banks are currently looking to provide.
  • 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.
  • Some bridging or short term equity release exists. However only via non regulated providers.

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

Remortgages in Spain

What is the process for remortgages in Spain

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

The first option is by way of subrogation. Moving the 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 in some circumstances.
  • 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,

The second option is to move with a completely different mortgage deed, so set up a new Spanish mortgage with a new lender

  • Remortgage in Spain is straight forward closure of one loan and inception of a new one.
Calculating Spanish mortgage costs

What costs apply for remortgages in Spain

Because Spanish Banks are not active in the remortgage market there are no fee free options. Any set up costs, valuation costs or legal costs will need to be covered by the applicant.

What are the normal costs of Spanish mortgage arrangement.

  • Costs will 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 mortgage amount. These funds must come from you.