If you have a mortgage, in the next few months you may have to accept the new interest rate hike from your bank, or try and find a better deal.
The newspapers would have you believe that it is almost impossible to get a mortgage at the moment, with the banks terrified that borrowers will default – let alone expats who are considered a higher risk. Yes, even if you have a steady income, the fact that you were not born and bred here apparently means you are more likely to hightail it back home at the first sign of trouble.
However, mortgages are still big business for the banks, and if you can prove that you have a regular income, while it may be difficult, it is still possible to get a good mortgage.
For example, did you know that you can extend your current mortgage for ´free´? For example, if you have a 25 year mortgage, but are still of an age to qualify for a 35 year mortgage, the government has said that you can extend it without having to pay the ridiculous amount normally charged for admin fees etc. Of course, this is in theory and would require co-operation from your bank, but it is certainly something worth considering if you are struggling to pay your mortgage.
Yes, of course if you do this you will ultimately pay more for your mortgage in the long-run, but quite frankly, immediate survival and an extra couple of hundred euros spare a month are more important right now. You should always try and pay off your mortgage as soon as possible, but you can look at this when your financial situation is better.
Also, many expats often only go to the high street banks for mortgages as they don´t have the language skills to research further. But if you know enough Spanish to get by, you can look at www.bankimia.com which is similar to Moneysupermarket in the UK and compares a lot of Spanish mortgages, both online and high street.
There are also great mortgages available from www.oficinadirecta.com and others online, where you only pay interest on the mortgage, but with the option to pay off capital as and when you want. Had a good month and saved a bit of cash? Pay off some of your mortgage. Had a bad month with lots of bills? Only pay the interest.
There are options available, you just need to search for them! Easier said than done of course when in a foreign country, but it is important to try not to limit yourself to mortgage brokers, who will offer you mortgages from the banks they have deals with – which is not necessarily the best option for you.
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Tags: mortgage, online banks
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Invaluable advice. Another couple of points I would add to help those who have secured a mortgage.
If the mortgage is in the UK you will, on completion, send over a lump sum. If this is going into your Spanish bank account speak to your bank manager over here before you send it and ask them what you can do to reduce their fees. Most people know they will be charged to send money to Spain but less people know that banks here charge to receive – and if you are sending over a lump sum that charge can be quite significant. We had one client who unfortunately sent over a large amount without speaking to us or their bank beforehand and were charged over 700 euros. There is usually a way around these charges – you may have to open a savings account with the bank for instance, but it is well worth it.
If you are looking for a mortgage in Spain check how much you are being charged for set up fees. We have seen 0.5% up to 2% and it can pay to shop around or try and negotiate this fee down.
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