THE GLOBAL CREDIT CRISIS & THE PROPERTY DOWN TURN CHANGED MANY THINGS IN SPAIN. ONE OF THE MOST NOTABLE CHANGES HAS BEEN THE FACT THAT IT IS MUCH HARDER TO OBTAIN MORTGAGE FINANCE THAN BEFORE.
10 years ago it would have been very easy to go to your local high street bank or building society to obtain a loan against your home as long as there was enough equity within the property. Nowadays this is not the case of course.
High street lenders are under pressure to be more responsible when it comes to loaning money against property and are now subject to stringent external audits so they are being very careful when underwriters come to making lending decisions.
This can affect many people who are deemed a slightly higher lending risk to underwriters. So what is the answer for those who own property and have equity tied up within them?
Banks are now trying to pigeon hole mortgage applicants and are insisting that potential borrowers are;
- The correct age.
- Have enough demonstrable income over a long period of time to service the mortgage.
- The right residential status or nationality.
- Clear of any outstanding debts for example, community charges, debts with your local taxes and that you have no arrears with any previous loans, mortgages or credit commitments.
- Have a perfect credit score.
- Your property is NOT classed as built on rustic land
If you don’t comply with the above, you need to speak to FFA.
Fluent Finance Abroad understands that lending can and should be looked at on each applications merits and the clients’ circumstances. Therefore we have been busy building an alternative lending platform which can solve any lending opportunities the banks are unable or unwilling to take on.
We have a number of individual investors or PEERS that have the capacity to lend and are flexible enough to consider the application on its individual merits.
Here are some examples of where we have been able to arrange what we call PEER to PEER lending.
This client was 79 years of age and was recommended to FFA by his bank when he asked for a €40.000 mortgage on an unencumbered property which he was refurbishing. He needed the funds to complete his project which was to turn a two bedroom, two bathroom bungalow into a three bed, three bath independent property. The bank of course couldn’t assist even though AB had completed 85% of the project using his own funds.
FFA went to visit the client at the project and it became clear that the lending opportunity was a good one and we found a Peer to assist AB complete his project.
Due to AB age, FFA insisted that he took independent legal advice and we met with his representative to go through the lending contact with AB and we signed at notary with all parties present and in agreement.
Don’t be afraid to make the change if you are not happy with the service you are currently getting.
Mr & Mrs TPW
These clients we in a position to buy a plot of land in a very prestigious area of Marbella and start constructing their dream villa.
They have a very international business but were not considered to be resident in a specific country even though their business is very recognisable, therefore Spanish banks were unable to assist.
They needed a large sum of €2 million to complete the property but now it has been completed and it on the market for €8 million and being rented on a short term basis until a buyer can be found.
Has a plot of land which she inherited from her father’s estate and wanted to build a small villa as an investment to either rent out or sell on for a profit.
She approached her bank for a self build mortgage which should have been straight forward but, unfortunately, as she runs a mainly cash business, she was unable to prove to the bank that she had sufficient income to service the mortgage. She also had another property that she lived in, un-mortgaged, which we were able to lend on so she could release the funds necessary to get her project off the ground.
We have been able to inform her as to what she needed to do in terms of income verification in order to obtain a high street mortgage and she is currently working with her accountant’s on her next tax declarations so that we can refinance the Peer to Peer lending when her tax returns are due at the end of the tax year.
The project is 80% complete and will be finished and ready for sale in 6-12 months’ time when all the licences have been granted by the town hall.
If you have a lending idea and you have been turned away by your bank or want to speak to us to see if FFA can use their contacts either via the traditional high street route or via the alternative Peer to Peer lending market, please feel free to make contact at your earliest convencience.