Statement from Fluent Finance Abroad re Brexit and it’s effect on Spanish Mortgages for British borrowers

Statement from Fluent Finance Abroad re Brexit and it’s effect on Spanish Mortgages for British borrowers

From the moment David Cameron announced the date for the referendum on the 20th February 2016, we as a business decided to put any major expansion on hold until the result came in.

Now the result is in, I think everyone involved with Spanish property has been left a tad shocked by the result of the Brexit vote but I thought I would send you our take on what effect this decision could have on our Spanish mortgage business.

It seems that the main concern right now is coming from the UK and not from lenders here which is good news.

I think that once the dust settles, we may find that confidence might start to come back although some of our clients are very unhappy with the result and I don’t think we have heard the last of this referendum.

Lending to UK residents might tighten a tad but they will not cut lending off to Brits in any shape or form.

The main concern seems to be the rate of exchange between sterling and the Euro. I do believe that the pound will weaken against the dollar but not too much against the Euro as the leave vote will affect confidence in the Euro zone as well as the UK economy. (I may be totally wrong here of course so don’t hold me to this)

On Wednesday 22nd June 2016, you could have transferred Pounds into Euro at an exchange rate 1.30 but today, Monday 27th June 2016 the rate of exchange was at 1.20.

In real terms this is what a real example looks like;
A UK client has a purchase cost including taxes etc of GBP 150,000 which if the currency transfer was done on the 27th June 16 would equate to 195.000 EUROS.
If the same client waited until Monday 27th June 16, a few days later, the amount of Euros would be €180.000, obviously a difference of €15.000 or GBP 12.500 correct as 27th June 2016.

Now, understanding that mortgages for Brits are pretty much business as normal, anyone committed to purchasing in Spain can obtain a cost effective mortgage to purchase, therefore minimising the amount of cash that needs to be sent over and consequently minimising as much as possible the currency risk which is good news.

Some of our mortgage deals will allow the client to pay lump sums off at any time without any penalty meaning that if sterling did recover the client could reduce the mortgage to a level they feel more comfortable with. They can in theory also pay the whole lot off and be done with it.

We can make the deal as flexible and as consumer friendly as possible.

As an example, if a UK client borrowed €100.000 over 25 years at a very competitive rate of 2.15% (which we are getting for UK clients) the cost per month would be 434.29 € which roughly equates to GBP 353,08 per month which is more than reasonable.

As you know, all the advisers here are highly experienced and available for consultation whenever the need arises please feel free to drop any of us a line.

We would advise any potential client thinking of transferring Sterling into EURO to speak to a recognised & regulated currency exchange company.

40 years after the death of General Franco – Spanish Mortgage Market Cleans Up Its Act

Press release…

Spanish Mortgage Market Cleans Up Its Act

Whilst mature mortgage markets such as that of the UK have learned from their mistakes and now heavily regulate the selling of financial products, Spanish banks are currently licking their wounds and suffering under the weight of repossessions on their balance sheets. New Prime Minister Rajoy is on a clean-up mission.

Independent Mortgage Consultant and Owner of Fluent Finance Abroad, Marc Elliott, explains, “You have to remember that Spain has only been a fully-fledged capitalist democracy for 35 years, and without the infamous dictator Franco for 40, so its banking and mortgage systems have had comparatively less time to mature. As the property market boomed, many banks took a naïve approach to lending money and they are suffering for it now. Whilst the UK has various checks and balances in place to prevent the recurrence of scandals such as the endowment mortgage mis-selling of the 80s and 90s, Spain has yet to get a watertight grip of its financial products although Rajoy is making huge strides.”

Marc continues, “Whilst Spain didn’t have ‘official’ subprime mortgages in the same manner as the US, throughout the late 2000s it did fall victim to unrealistic mortgages being handed out by greedy banks with the help of unscrupulous mortgage advisers, real estate agents, lawyers, surveyors, valuers and accountants. Local newspapers bore adverts offering fake P60s for credit purposes and many people took advantage. The consequence today is banks having to repossess a significant number of homes making them huge real estate owners and putting a strain on their balance sheets – particularly as Rajoy is asking banks to make additional provisions. The Government is forcing takeovers and mergers – Banco Sabadell acquired CAM bank for one euro in December 2011, BBVA acquired Unnim bank for the same price this month – in order to accelerate the clean-up.”

Marc Elliott gives his insight into today’s Spanish mortgage market:

Are Spanish mortgages still available?

Whilst the main priority of most banks is to try and offload the stock that they are currently in possession of, rather than lend money to new borrowers, there are of course still mortgages available. ‘Good’ deals, such as those seen in the past, are either non-existent or hard to find but if you have a good income and clean credit history the banks will lend. Certain banks did not fall into the reckless ‘subprime’ trap and are lending pretty much as they were prior to the credit crunch.

What percentage loan should I expect from lenders today?

Dependent on the individual application, a general rule of thumb in 2015 is 70 – 80% for Spanish residents and 60 – 70% for non-Spanish residents. Current lenders will now lend only on the purchase price or the valuation – whichever is lower.

Why are 100% (plus) mortgages still available – is this not madness?

Mortgages are available at 100% – or even 110% to include purchase costs – but only for specific properties or developments that are owned directly by the banks. You will not be offered a 100% mortgage on a traditional resale home.

Should I therefore buy a property direct from the bank because it is easier to get a mortgage?

Not necessarily – it does depend on your circumstances. If you are a first time buyer and you don’t have a large cash deposit then it would be wise to consider a bank property. If you have a sizeable deposit at your fingertips it would probably be better to look at the traditional real estate market as these properties tend to be slightly better value for money. At the moment banks are looking to get the best price possible for their properties to try and recoup the original funds that were lent, they do this is by slightly inflating asking prices and offering excellent finance terms such as little or no money down deals.

Shall I just purchase a property with my own funds and be done with the banks?

If you are lucky enough to have readily available funds at your disposal and you can find the perfect property within your budget, go for it. However, if you feel you are limiting yourself this way, then it is worth considering upping your budget slightly by using a mortgage and keeping some cash aside in your bank for a rainy day. Beware it is extremely difficult to release equity from a Spanish property at this moment in time if you urgently need funds sometime in the future.

What do I do if I am interested in finding out more about Spanish mortgages?

Get informed and do not take the first piece of advice you receive to be gospel. Speak to numerous banks or seek professional independent advice from a qualified person operating in your area. Always speak to more than one mortgage consultant to make sure you are satisfied that you are getting the best person to represent your interests. If anyone suggests that obtaining mortgage finance in Spain is easy, they are not being completely truthful. Securing ‘debt’ should never be entered into lightly.

I already have a Spanish mortgage that I am worried about, what can I do?

First and foremost don’t panic. If you are already finding that you cannot keep up with mortgage repayments then it is essential that you take steps to deal with the problem. Again, consult an independent expert to see if there are any alternatives out there in the market which could solve your problem and also speak to your bank to see what ideas they have – take an independent expert with you to this consultation if you prefer. Be warned, bank staff, however nice, work for their paymasters and can only recommend what their banks offer. If you are comfortably keeping up repayments but feel you could get a better deal elsewhere, again, speak to a professional adviser to explore your options.

Contact Fluent Finance Abroad on telephone 00 34 952 85 36 47, email or visit

About Fluent Finance Abroad – Our team of UK qualified financial advisers (FPC) and mortgage professionals (CeMap) specialise in finding the most appropriate form of finance to purchase investment or holiday property overseas.

Spanish Mortgages – Should I?

Spanish Mortgages – Should I or Shouldn’t I?

Tax Help Man
help I need a Spanish mortgage for my Spanish property purchase

It seems to be the million dollar question these days and there appears to be a great deal of confusion as to whether or not Spanish banks are actually lending to foreign borrowers.

The first thing to point out is that YES Spanish banks are lending to foreign borrowers and it is much easier than you might think.

Two or three years ago it was very hard to find a Spanish bank willing to open it’s coffers, not just to non Spanish clients but to Spanish nationals too.

Saying that, there are only a few banks worth talking to when it comes to borrowing money. Therefore anyone thinking of going to a Spanish bank themselves should take great care when dealing with the various banks that say that they are open for business.

The things that you need to watch out for are the following;

  • Lack of consumer protection –

In our experience Spanish banks can and will say pretty much anything in order to try and get some business through the door. They will say YES to appease you and entice you in. Once you are in you may find that you will hear a number of excuses as to why it is taking so long to get a decision or you will find that the terms and conditions that they originally said they could offer have suddenly changed for the worse. The problem with this is that by the time you have found out what they are actually willing to offer you, which might be very unpleasant, you have already put your deposit down and have a completion date to fulfill. Potential buyers have found themselves with no option but to use the mortgage offer given to them. Otherwise they could stand to lose the deposit for the house they wish to buy as they could go over the timescales set in the purchase contract.

  • It is never the branch staff’s fault –

Branch staff will always blame those faceless people in the risk department or underwriters for the reasons why you didn’t get the terms offered originally or why you have been declined for the mortgage. The frustrating thing is there is nothing that you can do if that is the decision that has been made.

  • Just because the bank is an international name it doesn’t mean they are any good –

I always hear from potential clients “I tried one of the big well known banks as I thought they would be best to help me as I recognise them / or have an account with them in my own country.” Do not fall into this trap, ask yourself how good are the big banks in your own country? I would imagine that they are so big that you do not get the service that you feel you deserve. Spain is no different, the big banks over here, I would say, are even worse and I believe that if it wasn’t for their interests in other countries such as South America and in other countries in Europe and the US, these famous Spanish banks would not exist today. The level of service from some of these banks is plainly awful.

  • You will not get an official agreement in principle until you submit a full application –

There is no Agreement In Principle (AIP) system in Spain. Therefore you will need to get all your paperwork together and submitted to them before underwriting can give it the OK. Some banks will not even do this until you have paid for a valuation of the property. This is something that makes me extremely angry with them, I mean why would you ask a client to pay for a survey when you aren’t guarateeing that the mortgage will be forthcoming after it has been paid for? Surely it would make more sense to get the income documentation verified and OK’d by the risk department first and then send the surveyor to assess the property. Sometimes I get the feeling that certain banks are encouraged to do this whatever the outcome because they may get a small commission from the valuation company. This may sound cynical but having spent TEN years working with Spanish banks I wouldn’t put anything past them to be honest.

  • Be careful of what hidden products they will insist that you take in order to approve the mortgage –

This is a very old trick that Spanish banks pull. They may have agreed to the amount that you need but you may not know until a couple of days before completion date or even at notary, on the day of completion, that you have to sign up to life insurance, credit cards, home and contents and even a pension plan. Some of these products are inoffensive such as home and contents which to be fair you need to have, but things like pensions and credit cards are just abusive in relation to a mortgage application. Special attention should be taken when they insist on life insurance. Some lenders will insist that you pay for the life cover up front and they say that it would be unfair of them to expect you to pay for it out of your own pocket, so they give you a loan to pay for the life insurance. HOW NICE of them! Now let’s analyse this, they sell you life insurance which they probably get a commission for and as they lend you the money to pay for it up front, they also gain interest on top of that loan. This is outrageous and should be reported as mis-selling in my opinion.

  • Make sure you are aware of the costs of setting up a Spanish mortgage –

Most real estate agents and lawyers fail to mention these costs and just give potential buyers the normal line of “closing costs should be in the region of 11%.” Please be aware that if you are considering using a Spanish mortgage to help you buy a home here, then you will have to factor in extra funds to pay for setting up the mortgage deed. Typical costs are; 1-1.5% to the bank who are arranging the finance for you; 1.8-2% stamp duty (AJD) which is paid to the government; notary, admin and legal fees for registering the mortgage deed. All of the above percentages are always based on the size of mortgage you require.

  • Don’t expect to get ADVICE from a Spanish bank –

They will only offer you what products they have so cannot give you advice on what Spanish mortgages products are best for your requirements, having worked for a bank in the UK I can tell you how limited bank employees are when trying to recommend best advice to potential clients.

  • Finally, there is really very little consumer protection in Spain for borrowers –

If you are considering taking a Spanish mortgage, make certain that you ask the right questions at the outset, if you know what they are. Once you have signed the contract you will find it very difficult to get out of it at a later date. You will probably have to employ a Spanish lawyer which could be very costly. The best thing to do is get an expert to assist you.

So should I or shouldn’t I get a Spanish mortgage?

The answer is definitely consider one, as it could be the key in being able to afford your perfect property which might be out of your budget without one. The main bit of advice, is be very careful of how you go about obtaining mortgage finance for a Spanish property purchase.

If you feel like you would like a free consultation please make sure to contact us at Fluent Finance Abroad.

Written by Marc Elliott de Lama 10.062014

Bankia to close 99% of branches on the Costa del Sol

Worrying news for Ex Caja Madrid & Bancaja customers as staff are told to announce that Bankia are to close 99% of branches on the Costa del Sol.

Bankia España

Having heard the rumour that Bankia were closing all of its branches in Marbella I decided to pop into my local branch (Ex Caja Madrid) to see if the gossip was in fact true.

I emailed the branch manager to see if he was able to meet with me to discuss this and to my surprise I received a very quick response informing me that he was available to do so and we arranged the meeting with no problem at all.

Basically the outcome of the changes are that all ex Bancaja and Caja Madrid branches will be closed in Andalucia apart from a few representative branches in Major cities including Malaga.

This means that if you are an existing Bankia client you will have to go to Malaga to speak to someone face to face which can be a huge inconvenience.

What should you do if you have a relationship with Bankia?

Well it really depends on the type of relationship you have, for instance, if you just have a current account or savings account then it would be fairly easy to make the transition away from them to another more stable local bank of your choice. If on the other hand you hold a mortgage or then you will need to keep your account open with them for payment of said loan but that doesn’t mean that you still couldn’t open a new account with a new bank and arrange regular transfers to service the mortgage or loan that you already have.

Personally given the terrible press that Bankia have had in recently months / years, I believe it would be a good idea to relocate your banking relationship away from Bankia especially if you have savings with them as, even though they have had government / tax payers money, it still doesn’t guarantee that money would be 100% safe and anyway, why would you want to travel to Malaga or Seville just to query any charges you may have incurred.

If you need to talk about your Spanish bank account and potentially moving it, please don’t hesitate to get in touch with Fluent Finance Abroad.

Spain to Grow Faster Than Germany : PWC

International accounting giant PricewaterhouseCoopers (PWC) is predicting Spain’s growth will outstrip that of both Germany and France from 2015 to 2019.

Annual growth in Spain will be 1.79 percent in this period, against 1.5 percent for the Eurozone, said the accounting giant in the September issue of its Global Economy Watch.
Spain’s growth will also be higher than that of Germany (1.5 percent), France (1.6 percent), and Italy (0.8 percent).
Fellow struggling eurozone economies Greece and Ireland are also predicted to see strong growth from 2015 to 2019 — at 2.5 percent and 2.7 percent respectively.
The PwC forecasts for Spain reflect a generally positive diagnosis of the state of the European and World economies.
“After five years of crisis, recession and disappointing growth we think that developed economies may now be approaching the ‘escape velocity’ needed for a sustainable recovery,” said the authors of Global Economy Watch.
They cited the Eurozone’s 0.3 percent growth in the second quarter of 2012, the slight growth of the US, Japan and the UK in the same period, and a bump in global consumer sentiment.
But the accounting firm said the Eurozone’s problems were not over.
“Economic fundamentals are still weak in (the zone’s) peripheral economies,” said PwC.
The firm also expressed concerns about debt sustainability and high unemployment in some Eurozone countries.
On a global level, the slowing growth rates of countries like India, China and Brazil was also a cause for concern.

George Mills Article from El Local

FFA coments

For Spain to Grow faster than Germany : PWC is would still think have the banks that are in trouble will need sorting out and this could take at least another of couple of years.

There are some deep routed problems relating to certain banks here and I still don’t think that we have seen the last of certain problem issues that need to come out.

Santander hires ex-Bankia chief Rodrigo Rato for international advisory committee

Leading Spanish lender Banco Santander has hired Rodrigo Rato – who was chairman of Bankia shortly before it was nationalized – for its international advisory committee.

Bankia was taken over by the Bank of Spain in May 2012 and subsequently needed an injection of 22.424 billion euros in taxpayer money to restore its balance sheet. Rato – who was economy minister under former PM José María Aznar and subsequently the managing director of the IMF – faces, along with other former members of Bankia’s board, possible charges of fraud, false accounting, criminal mismanagement and misappropriation.

Rato previously worked in a similar role in Santander prior to joining Bankia and received 200,000 euros a year for his services.

Article from El Pais in English

FFA Comments

So the famous Rato Rejoins Santander Bank Spain since leaving his post at the troubled state owned Bankia Bank with a very long list of potential charges against him for fiscal wrongdoings when he was in charge at Bankia.

What does this say about Santander and the Spanish banking system in general? I would say nothing particularly good to be honest. Let’s face it, wouldn’t it be a much better PR exercise for the bank to wait until we know if he is going to be charged with these serious fiscal offenses and wouldn’t he himself feel that it would make sense to keep out of the public eye and concentrate on clearing his name before taking up a post at Spain’s most famous bank?

With corruption in the Spanish news daily and the mess that the banking industry is in general I think that teh people that run this country do need to take to good long hard look at themselves.

Spain’s La Graciosa Island Loses Only Bank

The 600 residents of the minute Canary Island of La Graciosa, or the Funny One, will have to take a boat from now on whenever they wish to make a cash withdrawal.


Cash-strapped Bankia will close 54 of its bank branches across the Canary Islands in October, but none of its clients will be as greatly affected as the Gracioseros.

Once the La Graciosa branch closes its doors after 25 years on the sleepy 29-square-kilometre island, all banking operations will have to be carried out in neighbouring Lanzarote after a half an hour boat ride.

The trip will also include a small drive to the municipality of Haría as the port town of Orzola where the boats arrive doesn’t have a Bankia branch.

La Graciosa, which receives approximately 25,000 visitors a year, has been fighting for greater autonomy over the past few months.

Lobby group “Lagraciosala8islacanaria” gathered thousands of signatures across the Canary Islands in May in the hope of convincing the Canary government to recognize La Graciosa as the eight island in the archipelago.

Recognition of La Graciosa’s island status would mean locals would no longer have to turn to Teguise Town Hall in Lanzarote whenever new rubbish containers were needed or there was an electricity or water cut.

But the closure of the isle’s only bank is only serving to further hamper their aspirations of self-sufficiency.

Bankia had previously only opened their doors on the island twice a week and installed a cash machine which caused havoc when it was out of order for more than ten days.

“They’re disrespecting our struggle and don’t realize what village life is like,” lobby spokesperson Miguel Páez told Spanish daily El Mundo.

“With this move they’re stopping us from progressing.”

Gracioseros are already planning a demo in front of the Bankia branch for the September 12th to force the bank to find a solution.


Article by: Alex Dunham, The Local