Clausula Suelo – Interest rate floor clause

The clausula suelo is the most common claim against lenders as this clause would ensure that the interest rate you would pay would never go below a certain level which in most cases have been around the 3 – 5.5% mark. Given that interest rates since 2011 have plummeted and that the EURIBOR is actually below zero, this means that you would be paying an extremely high interest rate compared to current market rates.

For example, a client of ours took out a mortgage for 220.000 € back in 2007 with a floor clause of 3.5%, but with a margin above EURIBOR of 1.25. She had been paying 3.5% when she should have been paying 1.25% for the last 6 years.

We calculated that the client had been overcharged by 23.000 € but in the end she ended up recuperating more than 27.000 € given the amount of time it took for the lender to agree to settle out of court and the compensation interest of 4% the bank had to pay on top of the overcharges.

Now that the lender has agreed to take away the “miss-sold” floor clause, this clients’ new monthly mortgage payments are now calculated on the correct interest rate of 1.25% rather than the 3.5% meaning she will continue to save thousands of EUROS per year for the rest of the mortgage term that she signed up to.

This clause was deemed unfair by the European Court of Justice and therefore all mortgage contracts with this clause inserted will be successful with their claim.

Banks however are under no obligation to refund the amounts over charged and it is generally required to take legal action against the lender in question (no S) to ensure the refund is given and the correct amount return plus interest of 4% to 6% as compensation to the injured party.

If you have been approached by your mortgage company offering you a reduction in your interest rate to 2% or above, then you could still reclaim the previous overcharges that have been levied against you.

Chances of a successful outcome are very close to 100% but each case must be studied closely and we would welcome any enquires and will advise accordingly with no financial obligation from the client.

Contact us today. – We look forward to hearing from you.

Multi-Currency Mortgages

In continuation in our series of articles, Fluent Finance Abroad offers a quick insight into another type of mortgage claim, more uncommon than the ones described in our previous series of articles about mortgage set-up expenses and the famous clausula suelo. Today we are talking about Multi-Currency Mortgages, Foreign Exchange Currency Mortgages or as they are named in Spain, hipotecas multi-divisas.

Before the credit crisis, these types of mortgages were being promoted to the general public by various national and international lenders in Spain and the consequences have been dramatic as well as disastrous for many that took these out.

In order to have an idea of what this financial product is, firstly let´s be clear that multi-currency mortgage is not a financial instrument regulated in the Stock Market Law, it is an unregulated high-risk financial product. And that is the main posture that the Supreme Court has defended in its latest judgement 20th of September 2017.

This type of mortgage loan allows for the instalments of the mortgage to be paid in a different currency to that of the country where the loan / mortgage is to be taken, which in Spain is the Euro. Thus, when a multi-currency mortgage is taken out, instead of Euribor, another reference rate is used, which tends to be the Libor, which will be associated with a different currency – Yen, Dollar, Swiss franc or Pounds Sterling to name the most common.

The most important consequence of this change in reference rate is relevant to the total cost of the loan, as well as monthly, quarterly and yearly instalments. Like with the Euribor, the Libor and the currency with which it is associated evolve over time, whereby there can be increases that can make your mortgage loan more expensive, or, on the other hand decreases, which make it cheaper. In this respect, these fluctuations of the currency chosen against the euro will be what conditions the cost of the loan.

Being subject to the foreign exchange market, this type of loan entails high variability or volatility in the final cost of the loan and the amount of the instalments. We can say that these types of mortgages are the opposite of stable.

According to the Directiva (EU Directive) 2014/17/UE Banks have the obligation not only to provide complete and correct information so that the clients understand not only the grammatical sense of the contract, but also the financial risks undertaken by signing the multi-currency mortgage. By not doing so, banks don´t comply with the Directive as well with the well-known “transparency control”.

Multi-currency mortgage product is particularly aimed at customers with strong financial knowledge, as its functioning is somewhat more complex than that of a traditional mortgage based on Euribor. In order the claim to be successful it is necessary to make it clear that the client that has contracted the multi-currency mortgage is an ordinary customer, not a stock market player and had no intention to speculate with differences in the exchange rates.

Moreover, as stated in several judgements of provincial hearings (SAP Santa Cruz de Tenerife Section 4 of 18 January 2017, SAP Valladolid Section 1 of 9 January 2017, SAP Valladolid Section 1 of 9 January 2017, SAP Palma de Mallorca Section 4 of 16 December 2016) the fact that the client once made a change of currency would not demonstrate neither his understanding of this kind of product, nor his acknowledgement of financial risk of multi-currency loans. Therefore, this fact does not suppose any difficulty in getting the estimated demand.

If you took out a Multi-Currency mortgage in Spain in the past and have / have not had problems with the repayment of that mortgage, there is a very strong possibility that the lender will be found negligent by authorising such a complex finance vehicle to an unexperienced currency investor and we urge you to contact us ASAP.

Multi-currency mortgage loans are normally more complicated and complex than the “normal” clausula suelo ones. Each contract must be accurately studied by our team of financial advisers and legal experts. We would welcome any inquiries and will advise accordingly with no financial obligation from the client.


For more information please contact Fluent Finance Abroad on 952 85 36 47 or by email

Anti-Brexit Spanish Mortgage Strategy

If you are being put off buying a Spanish property because of the drop in the value of the pound you need to read our Anti-Brexit Spanish Mortgage Strategy carefully.

You may feel that property prices in Spain will be affected by fewer British buyers coming into the market although it is important to bear in mind that there are still many nationalities eager to purchase here and in particular French, Belgians, Germans, Scandinavian, Eastern European / Russian and Middle Eastern clients. We even have buyers from Australia, New Zealand, North America / Canada & South Americas getting involved in the Spanish property market.

This means that prices are still, in our opinion, on an upward trend and there seems to be no evidence that this is going to change anytime soon. We see prices still increasing in Spain.

As the value of sterling has dropped by 18% against the Euro since the Brexit referendum on the 23rd June 2016 we thought it would be a good idea to try and explain how using a Spanish mortgage to purchase a property in Spain or any other EURO denominated property can be a very good idea.

The rate of exchange on the 22nd of June 2016 was around the 1.31 mark and as of today (23rd October 2017), we see sterling has dropped to 1.11.

We speak to many real estate agents that specialise in selling to British based buyers of Spanish property and the feedback we get is that the drop in sterling is not really having an effect on the amount of enquires they are receiving but it is having an effect on the amount of their clients actually taking the plunge and purchasing the property of their dreams in Spain.

At Fluent Finance Abroad we constantly keep an eye on how our market is changing and study ways in which we can use the tools at our disposal to give our clients an advantage given the state of market conditions at any given time.

Hence we are now finding that savvy British buyers are not being put off buying property in Spain as they are taking advantage of the availablility of non residents Spanish mortgage lending to facilitate and hedge against the low sterling value and buying a property using a Spanish mortgage.

How the Anti-Brexit Spanish Mortgage Strategy Works.

Mortgages in Spain are expensive to put in place. However even allowing for the cost of setting the mortgage up, in the long term clients will potentially greatly win out by taking a Spanish mortgage now whilest the exchange rate is so low.

If we take the example of a client, who is going to purchase a property for 300,000€. If they buy in cash with all taxes and fees added to the price, they will pay a total of approximately 337,500€ for the property. At todays exchange rate of 1.11 the client would need to transfer £304,054 to purchase the property in cash.

Assuming the client took a maximum 70% Spanish mortgage on the property, the amount they would need to pay  for the property would increase to 345’000€ to cover the extra bank fees or £ 310,810 @ 1.11.

A 70% mortgage would be 210,000€ (This reduces the amount they need to transfer by £189,189 @1.11 to the £, meaning they need to transfer a total of £121,621 instead of the full £310,810 at this stage in the buying process).

Once Brexit has completed (or cancelled depending who whose opinion you agree with) and things have settled back to a degree of normality in 2-3 years time the exchange rate should recover to around the pre Brexit rate of 1.31 to the £. At this point the client would need to transfer an amount of £160,305 to clear the mortgage completely.

This makes no allowance for the amount the client would have paid off the mortgage during the time they had it. Even taking into account the extra 7,500€ paid in Spanish mortgage set up fees the client has still managed to save themselves  £28,884 on the price of their property by taking advantage of the poor exchange rate.

It is important to point out that one of the main advantages of a Spanish mortgage is its flexibility when it comes to making early redemption payments of the loan amount either partially or in full. The fees to reduce the mortgage or to cancel the entire mortgage are very small and so you will have a great deal of flexibility to reduce the mortgage when the exchange rate goes in your favour. For example if you reduced your Spanish mortgage by €10,000 in the first five years, the charge would be €50 and after five years this is reduced again down to €25 for every €10.000 you reduce the mortgage amount by.

We are a long-established firm of independent mortgage brokers based locally in Spain and we have agreements with all of the major lenders. If you would like to discuss the Spanish mortgage market with us, we would be delighted to have a meeting or a telephone call to inform you of all of your finance options and to tailor an offer specific to your needs.

We look forward to hearing from you.

Contact us today.

Vive La France!

Les résultats des élections présidentielles en France ont laissé l’Union Européenne pousser un très grand soupir de soulagement. La peur d’avoir un gouvernement d’extrême droite au pouvoir en France, qui à son tour aurait surement conduit à la désintégration de l’Union Européenne, a été apaisée (du moins pour l’instant) et il parait que Macron, qui est un promoteur très fort de l’UE, va associer ses forces avec Angela Merkel pour faire que les négociations du Brexit soient les plus difficiles et les plus chères possibles pour le Royaume Uni.

De toute façon Macron a déjà surmonté le premier obstacle, qui était de gagner l’élection présidentielle. Maintenant il doit travailler très dur pour essayer de convaincre les électeurs français. Il y a eu plusieurs millions qui n’ont pas voté parce qu’ils n’auraient jamais considéré voter pour une nationaliste d’extrême droite comme Le Pen, mais, en même temps, ils n’auraient pas voté pour Macron parce que

beaucoup de français le considèrent, malgré sa jeunesse, comme un représentant de la vieille politique puisqu’il était ministre dans le gouvernement de François Hollande.

Macron doit donc travailler très dur pour convaincre ses électeurs de gauche et aussi de droite. Il est le Président de la République le plus jeune depuis Napoléon, qui a gouverné en France il y a deux siècles. Sa jeunesse, son manque d’expérience et une population française très sceptique, signifient que lui et son parti politique ‘En Marche’ auront une lutte difficile pour les convaincre sur ses politiques en faveur des entreprises, qui surtout vont déréguler le marché du travail afin de créer de nouveaux emplois et surtout des emplois qui sont respectueux de l’environnement. On verra si Macron et ‘En Marche’ peuvent gagner les sièges suffisants au parlement pour pouvoir défendre ses politiques.

Ces derniers temps et en particulier depuis la crise, les français sont devenus très intéressés par l’achat de propriétés en Espagne. La France est le pays de l’Union Européenne qui achète la plupart des biens en Espagne après les Britanniques, qui actuellement sont en train de négocier le problème du Brexit, et suivis par les Russes, Belges, Allemands et Suèdois. Tous ont acheté plus de propriétés qu’en 2007. Les belges par exemple n’étaient même pas sur la liste des top vingt acheteurs étrangers en 2007.

Maintenant que Frexit n’est pas encore une menace et en même temps que les acheteurs français n’ont pas de risque à l’échange, les résultats des élections françaises ont ouvert les portes à une augmentation encore plus grande du nombre d’acheteurs français qui cherchent des propriétés de bonne qualité au soleil d’Espagne. Historiquement le comportement des acheteurs étrangers et leurs intérêts

croissants pour le marché en Espagne ont anticipé une augmentation positive du marché immobilier en Espagne. Depuis 2011, le nombre d’acheteurs étrangers a commencé à croitre et en particulier, les acheteurs des pays plus riches de l’Union Européenne. Tout indique que le voisin au nord de l’Espagne croit fermement que le marché immobilier en Espagne est en très bonne forme et un bon rapport qualité prix pour l’investissement dans une deuxième résidence en Espagne.

En raison de la popularité des propriétés en Espagne pour les clients français, les banques espagnoles ont hâte de prêter aux clients francophones et elles ont conçu des produits hypothécaires espagnols en pensant à eux. Fluent Finance Abroad est un des brokers hypothécaires les plus grands en Espagne et nous sommes ravis d’aider les clients francophones en leur cherchant les meilleures conditions pour leur hypothèque en Espagne. Nous pouvons communiquer avec les clients francophones dans leur propre langue et les aider avec le processus d’achat en Espagne du début à la fin

British Banks and mortgages in Spain

British BanksHaving been arranging mortgages in Spain for over 13 years I feel like we at Fluent Finance Abroad, are well placed to inform you of how British Banks faired when it came to lending in Spain.

When I arrived in Spain back in January 2004 I walked into a frenzy of Spanish mortgage lending activity.

It seemed that there were hundreds of lenders all competing for the flurry of consumers from Spain and other parts of the world that fancied a flutter on investing in the Spanish property market.

Not only were Spanish lenders open for business, but there were a huge amount of foreign banks obtaining lending licences so that they could dish out cash on Spanish shores.

Who were the main players that were involved in lending in the Spanish property boom?

Well we had lenders from countries like Denmark, Holland, Norway, Sweden, Switzerland but the most prolific were the British banks.

For years UK banks were a high street presence in Spain and it was a common sight, especially in coastal areas to see Halifax Spain, Barclays Spain, Lloyds International Spain, Abbey National.

We also had lenders pass-porting in from Gibraltar of course, these included the likes of RBS / Nat West, Leeds Building Society or Norwich & Peterborough and they all seemed to be enjoying capturing a huge amount of new business and their respective head offices were keen to keep this going.

Why were British lenders so popular in Spain?

There are 3 main reasons;

  1. They were attractive to the biggest buyers of Spanish property which were buyers from the British Isles.
  2. They understood the income verification paperwork which would be presented by British clients, especially the self-employed British entrepreneur or property landlord.
  3. All British banks offered the holy grail of interest only Spanish mortgages that the Spanish banks were not prepared to offer.

All the reasons above seem reasonable at the time but then came the credit crisis.

Spain was hit extremely hard when credit markets dried up, but not only were Spanish bank hurt when the crisis hit.

British banks were equally affected, we all remember Northern Rock & Bradford & Bingley having to be turned into the bad bank of the UK.

British banks suffered so badly in the crisis they packed up their bags and left Spain pretty quickly and refused to lend anymore although they had huge toxic mortgage books which needed to be sorted out and cleared off their balance sheets.

Halifax Spain was sold to Lloyds and then Lloyds International then sold themselves to Banco Sabadell who now own TSB which split from Lloyds a couple of years back.

What’s the problem British lender face now?

This is a simple question to answer.

As most of the Spanish mortgages UK banks gave out were done on an interest only basis, the debt has not reduced down over the years.

The issue is that Spanish properties have reduced in value by as much as 70% in some areas and therefore many UK borrowers in Spain are now left with massive negative equity against their Spanish property.

The Interest only term do not go on for ever meaning that UK banks can now start calling in the debt.

This means that even if the owners sell their properties, they still have massive debts still to pay back to the bank which most borrowers are unable or unwilling to do.

Don’t despair, you must realise that this is as much of an issue for the British lending institution as well as it is for you, there are many reasons for this but a main one is that it can be a long and costly process to take legal action against a Spanish mortgage non payer.

The banks that are affected by negative equity issues in Spain are Banco Sabadell, Lloyds International, Halifax Hispania, Leeds Building Society Spain, Norwich & Peterborough, Nat West RBS Spain & Gibraltar & Jyske Bank.

If you have a mortgage in Spain that is in negative equity you do need to speak to a Spanish mortgage expert at Fluent Finance Abroad, we are able to guide you and help you give the property back to the bank, using current Spanish mortgage law, and leave the debt being 100% covered by the asset in question.

If you use current mortgage law in Spain, you are able to repay the whole debt, including community fees and property taxes by giving back the property.

You do need to know the law and therefore Fluent Finance Abroad Mortgage Brokers are best placed to assist.

Case Study:

Mr. JM bought in 2007 in Duquesa with a 100% mortgage from Halifax Spain for 275.000 € on an interest only basis, the debt never reduced and today the property was valued at 120.000 € meaning the client had a 155.000 € shortfall.

His bank, now Sabadell, informed him that his interest only payment of 500 € per month was ending and that his payments were rising to 2300 € per month which the client could not afford to do.

He approached us and we successfully managed to give the property back to the bank, witnessed by a Spanish notary issuing a certificate of full payment, meaning the client walked away from a serious debt in Spain.

The client had a number of property assets with equity in them so the fact that he has a legal document stating that he didn’t have a debt in Spain means that he and his family can sleep well at night knowing that the Spanish lender will not seek repayment via the county court system in the UK or Ireland.

If you have any questions please get in touch with us and speak to one of our a Spanish mortgage experts who can advise you and can help in many ways.

10 reasons for a Spanish mortgage when buying property in Spain!

1. If your liquid funds are in a currency other than Euro, you could fund part of the purchase by getting a Euro Mortgage therefore offsetting any currency fluctuations when it comes to sending funds to Spain to cover deposit and costs.

2. You may feel that your cash budget doesn’t get you the property you really want so getting a Spanish mortgage can give you the right amount of cash so you can purchase your dream property in the location you desire.

3. If the property is for investment and you wish to receive a rental return, it is worth considering buying a better property in a more desirable location, as these types of properties are more likely to get you a better rental return on your investment.

4. Interest rates are very low at the moment, therefore our clients are taking advantage of these historic rates in order to make the most of their cash and using their liquidity for other important things or investments.

5. Raising mortgage finance against unencumbered Spanish properties is almost impossible and therefore Spanish properties are very illiquid, meaning that the property would normally have to be sold to release quick cash against it for any reason, apart from home improvements. There are specialised lenders which can do this type of lending but tend to be more expensive than the high street options who do not entertain this at all. We get many enquiries from old cash buyers desperate to release funds to sort issues out back home or invest in other projects or investments but come to realise that they should have bought with a mortgage in Spain and therefore not tying up their cash. It can take a long time to sell a property in Spain just like in any other country.  Property is not a very liquid asset like bonds and shares because it cannot be sold within minutes. It can take several months.

6. The debt is against the asset in the country where the asset is held i.e. Spain. This is a good idea mainly because if there was an issue in your home country, the lending would remain in Spain and it would be difficult for the Spanish lender to raise a concern in the country where you are resident.

7. Spanish banks will do their own legal due diligence against the property meaning that if the bank will not lend against the property, it probably isn’t worth buying and it may even have legal issues such as not being properly registered. This offers you, the buyer, an extra layer of security when you purchase.

8. Short term Spanish mortgages are available so you don’t have to be tied into a long term mortgage here. You can obtain a flexible mortgage meaning you can cancel the mortgage at any time without incurring heavy redemption penalties. A perfect example of this is if a client is expecting a lump sum in the near future (i.e. tax free pension lump sum or a sale of a property elsewhere or a bonus payment from your employer), the mortgage can be cancelled in full or part leaving no charge against the asset.

9. You may have the ability to purchase more than one Spanish property if you wish to create a small holiday letting portfolio here in Spain. Contact our team and we can advise you as the the best way to do this.

10. Age is not much of an issue as lenders in Spain are able to lend on pension income.

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

Spanish Mortgages & Bank Bad Loans Surge To Record High

In September, official data showed on Monday, despite the near completion of a €41 billion euro zone – financed bailout of the battered financial sector

Risky loans, mostly linked to the collapsed property sector, climbed by 6.9 billion euros from the previous month to an unprecedented €187.8 billion ($254 billion) in September, a Bank of Spain report showed.

The bad loans rose to 12.68 percent of all credit extended by banks in Spain in September from 12.14 percent in August, representing a fourth consecutive record high.

Last year, the eurozone agreed to extend a rescue loan of up to €100 billion to shore up the balance sheets of Spain’s banks, swamped in bad loans since a property bubble imploded in 2008 plunging the country into a recession.

Spain, the eurozone’s fourth-largest economy, has drawn €41.3 billion from the rescue loan.

Despite the persistently high level of bad loans, Prime Minister Mariano Rajoy’s government last week said it would exit the eurozone-funded banking bailout in January.

Economy Minister Luis de Guindos said in Brussels that Spain would not request fallback assistance from the European Stability Mechanism, a rescue fund set up to provide a safety net for heavily-indebted governments.

While applauding Spain’s decision for the signal sent to markets, eurozone finance ministers called on Madrid to push forward with reforms to address the country’s economic challenges, budget shortfalls, high debt, and mass unemployment.

European Union chiefs said Spain’s draft 2014 spending plans placed it “at risk of non-compliance” with its deficit-cutting targets. Spain has agreed to respect EU-norms by reducing the deficit to less than three percent of total economic output by 2016.

Spain suffered a double-dip recession after the 2008 property collapse, emerging gingerly from the last downturn with 0.1-percent economic growth in the third quarter.

Economists warn of threats to its economic recovery, however, and say that the unemployment rate — running at 26 percent in the third quarter of 2013 — will remain painfully high for years to come.


FFA Comments

Spanish mortgages & Bank Bad Loans surge to record high! This is obviously still causing major problems for a large number of Spanish mortgage banks which is making the whole economy very sluggish. But this isn’t the case for all of Spain’s banks and there are a number, albeit small, that have not needed government bailouts or had to use all their financial reserves to balance their books who are generally still lending fairly normally.

These banks that are still out there lending to new clients I believe will take a large share of the market as they are the ones who are capturing new business and generating some movement in the economy.

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.

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.

El crédito continúa sin fluir a la economía española por motivos empresas sufre en Julio.

El crédito a hogares y empresas sufre en Julio
El crédito a hogares y empresas sufre en Julio

En el mes de julio, la financiación a los hogares descendió el 4,2% en tasa interanual mientras que la financiación a empresas retrocedió el 6,3%, según datos publicados hoy por el Banco de España.

El Banco Central Europeo tendrá una clara referencia de cara a su reunión de este próximo jueves sobre en qué punto se encuentra la financiación a las empresas y los hogares de la periferia europea, verdadera asignatura pendiente de la institución después de haber facilitado inyecciones de liquidez multimillonarias al sistema financiero. La liquidez ha dejado por tanto de ser un problema pero el crédito continúa sin fluir y su descenso, lejos de suavizarse, se agudiza.

Según los datos publicados hoy por el Banco de España, la financiación de la banca a los hogares españoles ha retrocedido en el mes de julio el 4,2%, una cifra que está en línea con el descenso del mes precedente, del 4,3% y que contrasta con la caída del 3,4% del mes de julio de 2012, todas las cuantías en variación interanual. En términos absolutos, el retroceso ha sido de 6.781 millones de euros, hasta un total de 807.446 millones de euros. Es el mayor descenso mensual del año y hay que retroceder a diciembre de 2012 para ver una caída que se le acerque y que entonces fue de 7.833 millones de euros.

En la financiación a empresas, el descenso en el mes de julio ha sido del 6,3% interanual, hasta los 1,082 billones de euros. Una caída de 9.101 millones de euros, también la mayor del año en términos absolutos y que está en buena parte también determinada por los factores estacionales propios del verano y las vacaciones. La variación se modera apenas dos décimas, frente al retroceso del 6,5% del mes anterior y el 7,1% del mes de mayo con caídas, eso sí, inferiores en términos absolutos.

Article posted by Cinco Días

SAREB the BAD BANK of Spain

What is it and what is it supposed to do?

SAREB or La Sociedad de Gestión de Activos Procedentes de la Reestructuración Bancaria, S. A, is being called the Bad Bank of Spain but in reality it is not a bank at all, for example you will not be able to open an account at your local SAREB branch.

Putting it simply it is a structured asset management company which has been created to hold assets with the view to resell these assets at some point in the future.

We have seen Bad Banks a few times before. They first appeared in the 1930’s in the US as a consequence of the Great Depression of 1929 – 1931 as a government mechanism to limit the damage bank failures would cause to economies if they were to occur in the future.

Most recently however, we have seen Sweden restructure it whole banking sector in the 90’s and I have very vivid memories of the Northern Rock Asset Management (NRAM) restructuring in the UK which occurred in 2010. Bradford and Bingley building society was a big casualty and also nationalised and now not in existence due to Santander taking over part of their business and rebranding and removing the name.

The Irish tax payer had to step in and help the government nationalise the vast majority of its banks creating the National Asset Management Agency (NAMA) so these banks could dispose of these underperforming or toxic assets somewhere so that someone else could deal with the problem.

The idea behind the asset management entities are that banks or lenders, that have a large proportion of toxic assets on their balance sheets, are able to offload these assets so that they can go back to concentrating on what they should be doing and that is general banking and lending in their specific markets again, rather than being bogged down and wasting time and energy trying to deal with the mess that is their books. This practice seems fair enough as long as governments penalise the people that destroyed the bank’s balance sheets in the first place and regulate them to make sure that this type of bad practice is very difficult to repeat in the future.

European governments have seemed to have done a decent job so far with progress being made in the UK, Iceland and Ireland, but what will the Spanish Bad Bank look like and how will it work?

SAREB has basically taken a number of distressed property assets from banks such as BANKIA, Nova Caixa Galicia, Banco Valencia, Caixa Catalunya & Banco Gallego to start of with and are considering in taking the toxic assets of Banco Mare Nostrum, CEISS, Caja3 & Liberbank. All of banks mentioned here have either received state funds or have been nationalised by the Spanish government with the aid of the Spanish bank bailout fund FROB.

All looks standard and fair enough so far, but who will get access to these distressed properties is what I get asked by a number of real estate agents? I popped into my local Bankia the other week to ask if they had any direct contact with SAREB and the answer was that they didn’t have a clue what was going on and that they weren’t even sure if they were allowed to sell the properties that were once on their books. This looks like it is a bit of a mess and half of the staff are unsure if they will even be in a job next month as they have just announced this morning that the unions and the government body to deal with job cuts (ERE) that there will be 4500 job losses within the next 18 months so my guess is that couldn’t really care less.

People seem to think that it will become a super bank and real estate agency that we will be able to go to and get a property at a below market price and walk away very happy indeed. If it is to be like that then SAREB have a lot of work to do.

To illustrate my point, there isn’t a public web site for SAREB that tells me all I need to know in terms of how ready or willing they are to service the general public or the thousands of real estate agencies there are in Spain.

My opinion of what SAREB is really there to do is to open its doors to large investment funds either within Spain or from abroad to negotiate bulk portfolio acquisitions rather than individual property sales to the general public. We have seen this in the UK and in Ireland where large institutional investment funds come in, by a large portfolio for a very heavily discounted price and then return them to the general market (to you and me that is) when they feel confident enough that they will make a decent return on their investment. These types of funds can hold on to these assets for 5, 10 or even 15 years if need be.

There are noises in the Spanish parliament stating that this should not be the case and the properties should be given back to the banks to sell to the individual but this could take the banks years to off load as they are not real estate companies and have no idea of what it takes to sell properties, for example they do not work on Saturday’s or Sunday for a start so who will be able to show them. Most of them finish at 3 p.m.

There is another story coming out today that states that SAREB will allow some of the properties to be sold by the banks, but the same banks that made the assets toxic in the first place are requesting a 3% commission for doing so.

Again these are just newspaper stories and nothing concrete has come of these.

It seems like it will take a good long while for any progress is to be made with this new concept for Spain. SAREB was supposed to be active in November but we still have no real idea as to who is working there and what strategy they have in organising the amount of assets they will have on their books.

I honestly believe that for the time being at least, if you wish to purchase a bank repossession then you would be better off speaking to a Spanish bank that has NOT been mentioned in this article.

Kindest regards,

Marc D. Elliott FPC/ Cemap
Independent Mortgage Consultant & Insurance Agent

Edif. San Mar – Local º1, Calle Jaen,
San Pedro de Alcantara,
29670 Marbella, Málaga, Spain
Tel- 0034 952 772278
Mob – 0034 600 413396
Skype – marcdelliott


All change in the Spanish property mortgage market

Spanish Prime Minister Mariano Rajoy is on a clean up mission to try to put his country’s mortgage market back on track.

Gone are the days when local newspapers had adverts offering fake P60s for credit purposes but it could take some time for the lending industry to become more mature, according to experts.

The Spanish government is, for example, forcing takeovers and mergers to accelerate the change. Banco Sabadell acquired CAM bank for €1 in December 2011 and BBVA acquired Unnim bank for the same price this month.

Whilst Spain didn’t have official subprime mortgages in the same manner as the United States, 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.

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.

‘As the property market in Spain 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 1980s and 1990s, Spain has yet to get a watertight grip of its financial products although Rajoy is making huge strides,’ said Marc Elliott, independent mortgage consultant and owner of Fluent Finance Abroad.

‘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,’ he added.

Dependent on the individual application, a general rule of thumb in 2012 is 70 to 80% for Spanish residents and 60 to 70% for non Spanish residents. Current lenders will now lend only on the purchase price or the valuation, whichever is lower.

There are even 100% mortgages available for properties or developments that are directly owned, that is repossessed, by the banks. But these are not available for other properties.

‘If you are a first time buyer and you don’t have a large cash deposit then it might be wise to consider a bank property. If you have a sizable 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,’ explained Elliott.

‘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,’ he added.

He also pointed out that it is extremely difficult to release equity from a Spanish property at present and it is best to 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,’ said Elliott.


Article: Spanish property mortgage market