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Home > Spanish Mortgages > Pssst! Looking For Cheap Spanish Property?

Pssst! Looking For Cheap Spanish Property?

October 5th, 2009

cheap spanish propertyLook no further. We had noticed early on this year (http://www NULL.marbella-lawyers NULL.com/forums/showthread NULL.php?t=193) how Spanish banks had offloaded large stocks of properties from their books and funnelled them to existing or newly incorporated real estate divisions under their control, much like SIV’s. This had turned Spanish banks de facto into the largest real estate agencies. What we had also noticed, based on the failed conveyance procedures our clients had endured this year due to them being unable to secure finance, was that banks seemed to offer significantly more competitive lending terms on those properties owned by them!

This weekend I’ve read for the first time in the financial press that banks are actually offering incredible financial terms on those properties held by them:

  1. 100% Loan to Value for residents (yes, you read it right, not a typo)
  2. Euribor plus a spread of only 50 basic points (or 0,50)
  3. Timeline? Take your pick. 40, 30, 25 years; anything goes.
  4. Interest-only? Not a problem Sir. Will it be 1, 2 or 3 years?
  5. Grace period? How would you like it, Sir? 1, 2 or 3 years?
  6. Opening commission? Early redemption commissions? It’s commission-free, Sir (!)
  7. Discounts available of up to 30 and 40% off from the market’s peak in 2007. Prestigious valuers’ appraisals ready-at-hand to prove the fall in price. Take your pick.

So where’s the catch? There’s none. There’s no small writing to be gleaned. It’s a straightforward deal. Banks will make money in two manners, both on the sale and on granting a mortgage loan on the property.

Reading through the spreadsheet just left you gobsmacked. It was as if we had stepped back in time using HG Well’s time machine to the good old days of …2006. How could you possibly miss on the opportunity of buying a property through them with all the above lending terms bearing in mind the Euribor Rate is at an all-time low? Touchée, that’s exactly the point to be made.

How can developers or Estate Agencies compete against this? They cannot, it’s that simple. Banks have become the fiercest competitors in the Property Market taking no prisoners in their wake. If you request a mortgage loan on any property other than the bank’s, they will only offer you 50/70% LTV (non-residents), Euribor Rate plus a spread ranging from 0,7-1,50%, opening commissions (usually 1%), early redemption commissions, no interest-only, no grace period, no…well, you get the drift.  This is clearly a competitive advantage that, unless you are a fellow bank, you cannot hope to overcome.  

If this is not a buyer’s market, then frankly, I don’t know what is.

Spanish Mortgages

  1. Steve
    October 9th, 2009 at 11:38 | #1

    It may be true that real estate agents cannot compete in terms of providing finance, but I assure you that those of use specialised in property bargains can now offer much better deals than any bank will ever offer.

  2. raymundo
    October 21st, 2009 at 08:10 | #2

    Dear Steve,

    Estate Agencies can indeed be competitive holding their ground in many interesting ways other than securing finance.

    After all Spanish banks are not marketing their properties very actively. i.e. in the case of Altamira (Santander’s real estate branch) they are only offering online 6 properties for the whole of the Province of Málaga. Not much to pick from really. And to top it off their prices do seem fairly steep for what they are offering.

    Regards,

  3. October 22nd, 2009 at 12:05 | #3

    We are based in the Canaries and are finding that we can be more competitive than the banks on price and service.

    Give us a try please

  4. February 9th, 2010 at 16:07 | #4

    Most of the bank repossessions in Spain owe the bank far too much to actually be a bargain and no way are they cheap compared to the many distressed sales there are out there. You are much better off looking at a distressed property than go through the banks after their repossessions, 1) because of the money that the property still owes the bank (example – 120,000 euro property 2 years ago, todays value 80,000 euro – with the property still owing the bank 100K+)!, 2) All the very best repossessions get snapped up by bank employees, 3) Admin fees payable to the bank in question.

  5. raymundo
    February 9th, 2010 at 17:38 | #5

    It’s odd timing Platinum you should choose precisely today to write on this matter.

    Amusilingly enough I was just now reading a similar article written by Justin Aldridge published today Tuesday 9th of February on the EOS forum, which draws exactly the same conclusions as I had done in my post above in 2009:

    http://www.eyeonspain.com/spain-magazine/death-estate-agent.aspx (http://www NULL.eyeonspain NULL.com/spain-magazine/death-estate-agent NULL.aspx)

    Without any intention of stirring up controversy on the matter, it has now become self evident in 2010 how hard banks are vying for buyers to unload their property portfolios.

    To put an example, in the building where we are located, banks closed down branches only to reopen bank-owned real estate outlets (!) such as Aliseda, which belongs to Grupo Popular. They are now advertising properties with huge photographs.

    As I wrote above, banks will be hard pressed against seasoned estate agents and agencies as the latter will be very professional and service-driven. Whereas banks are using their own employees to show around properties at often overvalued prices with clunky websites. Besides, they are targeting mostly Spaniards, not ex-pats.

    The one point in which agents do not stand a chance competing is in providing finance. And nowadays, with credit dried-up, everything hinges on this pivotal point. Which is why I concluded that banks were going to become awfully hard opponents from 2009 onwards, never mind other agents.

    Regarding bank repossessions, I’ve always said there was a lot of hype going on. You are much better off to look around or ask an agent for a decently priced bargain. Repossessions have been mistakenly overrated as the next-big-thing. Maybe I’m partly to blame for my article of 2008 that raised expectations on repos:

    http://www.marbella-lawyers.com/articles/showArticle/home-repossessions-in-spain-defaulting-on-mortgage (http://www NULL.marbella-lawyers NULL.com/articles/showArticle/home-repossessions-in-spain-defaulting-on-mortgage)

    Regards

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