The global credit crisis of 2008 led to a property downturn worldwide, and changed many things for the people of Spain. One of the most notable changes since this event has been that it is now much harder to obtain finance for a mortgage than ever before.
As little as 12 years ago, it would have been relatively easy to visit your local high street bank or building society and obtain a loan against your property, as long as there was enough equity within it to take out at the time. These days, this is not the case and people have had to turn to alternative residential lending in Spain.
High street lenders have now found themselves under pressure to be more responsible when approving large loans, which has resulted in a more conservative approach to authorising mortgages. As such, properties are now subject to much more stringent external audits, so they are being very careful when underwriters come to making lending decisions.
This new strategy affects many people who are deemed a slightly higher lending risk to underwriters, meaning it is less likely than ever that they will get a good deal on their mortgage. So, what is the answer for those who own a property and have equity tied up within it? Banks are now asking mortgage applicants to fit the following criteria.
- They are the correct age
- Have enough demonstrable income over a certain period of time in order to service the mortgage
- Are of the right residential status or nationality
- Are 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
- That your property is NOT classed as built on rustic land
We understand that there´s a lot of things to consider, but these are just some of the tight criteria that you must meet if you want to obtain a sustainable mortgage from one of our Spanish banks.
If however, you don’t comply with the above, we at Fluent Finance Abroad can help you overcome these potential hurdles.
We totally understand that lending can, and should, be looked at on each applicant´s merits, and the circumstances of each individual client. With this in mind, we have been busy building a mortgage alternative in Spain which can solve any lending opportunities that the banks are unable or unwilling to consider.
We have a number of individual investors that have the capacity to lend and are flexible enough to consider the application on its individual merits, enabling you to obtain the finance that you require.
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.