Bank-owned bargain properties – 10 tips on how to secure yours
Bank-owned bargains properties– 10 tips to secure yours: Spanish Real Estate has switched back to becoming a sellers’ market after years of recessional disruption. Now, with prices edging up, supply narrowing and fierce international competition for the best property and funding deals from banks and reactivated developers, more purchase management assistance is needed.
Q1 2017 has seen many buyers miss out on their first choice Spanish dream home because they hadn’t been aware of the end of the hazy, lazy days of buying in Spain have been replaced by a strong market that needs a well thought-out structured purchase management plan to succeed. More so for 100%, no deposit mortgages.
Here’s 10 tips to help you get organised, to be “Purchase Ready” to secure your chosen dream home in Spain.
1) Talk to an international broker
Much better deals on property and mortgages can be secured with someone who knows the business inside out and is fighting your corner. “Someone” like an international broker who can deliver great deals on mortgages and property. Some work for free to the buyer if, as standard in most countries, the property vendor is paying a sales commission. Other brokers work for the buyer via a conditional fee agreement (CFA) and want a success fee for that elusive mortgage and another fee if they get your property choice on terms that have you and yours celebrating – with negotiated price discounts often offsetting the broker fee.
2) Keep a low credit profile
Don’t apply for new credit around the time you are trying to get a mortgage, or you may be considered a greater credit risk.
3) Have your finances in order
When applying for a mortgage it is imperative that you can clearly demonstrate that you have the funds (typically 30% + closing costs of 12%) available for completion on the purchase. Spanish banks want affordability from mortgagees and demand 30-35% net of recorded monthly income. Your existing liabilities, including your mortgage or rental payments, loans, credit card payments and maintenance are taken into account, together with the proposed Spanish mortgage payments. All this must not typically exceed 30-35% of your monthly net income.
4) Look the part
Start running your bank account as if you already have a mortgage at least three months before you apply – Avoid excessive spending, cut out subscriptions and memberships that aren’t essential and don’t splash the cash on betting or gambling.
5) Build a good payer reputation
Try to improve your credit score before applying, one tip: put all expenditures on a credit card and pay it off in full each month, ensure you are on the electoral roll. Get a new copy of your credit report from Noddle to make sure it is correct and correct any errors, and to make sure you are not unpleasantly surprised if it’s bad news.
6) Be prepared, be Purchase Ready
Make sure you have all the relevant documents you need, passport or driver licence, bank statements, NIE, proofs of income, credit report, the works, the Spanish love their documents. Have everything listed as essential to your application in one place, like a plastic folder and scan onto a memory stick or a “Mortgage Docs” folder on your PC or smart phone. Doing this will save valuable time later on and reduce your anxiety and confusion.
Be honest and complete on your employment and residence history and include all your credit accounts, as “missed items” makes getting your loan harder and it will take longer. Remember, there might be other potential buyers eyeing up “your” home in the sun – so respond promptly to any queries on your supplied information. These might include explanations on negative pointers in your credit history or divorce settlement etc.
7) Get a good lawyer
There are many good Spanish solicitors like Spanish Law in Alicante, Madrid and Malaga who cover the whole of Spain. You need a good team behind you to avoid being cheated, losing out on your dream home or losing money. You Mortgage 100 team includes a good broker, estate agent and a Spanish lawyer – all working to get you the best deal on mortgage and property.
8) Best mortgage for your needs
Have in mind the type of mortgage you want. Your broker will advise as to the most suitable, given your circumstances. The rates vary greatly, but the new Hola Bank subsidiary of Spain’s biggest retail institution, Caixabank is warm and friendly – with a 16-page application form to keep you occupied over the weekend. There are still 100% mortgages, difficult to get, but worth it as the rates are often below national inflation rates in many countries – this is like an interest free loan for many buyers. Initial low payments deals and fixed interest for 15 years are useful options that can often be negotiated for hard strapped buyers.
9) Know your mortgage limits
Determine how long you want your mortgage term to be. Some banks will go up to 35 years or age 70, whichever is the sooner. You will pay less each month the longer it is, but bear in mind you will be paying more interest overall. In most property purchases you will be paying interest on the estate agents’ sales commission because it is built into the property price. Average estate agents’ commission in Spain is 6.5% and interest on this over 30 years can be substantial. Might be cheaper to find a broker and pay their fees on a one-off basis?
10) Be ready, be flexible
After years of recessional fall-out Spanish real estate in 2017 has switched to being a sellers’ market. Prices are rising, there are more competing buyers and more suffering from disappointment after losing out on their property choice because they hadn’t got their act together. Being Purchase Ready will land that mortgage quicker and position you on the inside track for securing the property you want the most.