Banks Tighten Mortgage Conditions and Drop Prices
11 May 2012: Spanish banks are becoming increasingly selective about the
mortgages they issue to overseas buyers for their bank repossessions. CAM bank
holds one of the largest stocks of property at the Polaris World resorts in
Murcia and was recently bought out by Sabadell banking group. Buyers from the
UK and northern Europe can still obtain 90% and sometimes 100% mortgages on the
properties on offer. However the key criteria of proof of income, good credit
report and ability to pay are being rigorously followed. The banks are now
turning to further price reductions to accelerate sales. We recently saw a 25% further
reduction on a selection of properties on top of the half price that they were
already being offered at.
Buyers in full time employment with good disposable income
usually find no problem with their application. Likewise self-employed buyers
with several years’ tax returns also qualify. Problems arise however where
buyers do not have relevant proof of income (eg cash in hand earnings) or where
they hold several buy to let properties already.
At Mar Menor resort we can obtain the highest LTV for
clients with mortgages up to 100% on offer at competitive interest rates of
just Euribor + 1% currently. That translates to a mortgage rate of just 2.75%.
Mortgages can be interest only for the first two years. Elsewhere at Hacienda
Riquelme and Condado de Alhama resorts a 90% maximum mortgage is on offer and
at Terrazas de la Torre resort (a different Spanish bank again) the review is a
little more flexible but 90%-95% is possible.
On every resort (except Terrazas de la Torre) deposits
placed on properties are fully refundable should the buyer not obtain the
mortgage they requested. The process can typically take 1-2 months and is
largely dependent on the applicant submitting all the necessary paperwork,
which can be done from the UK by fax/email/post.
The recent drop in prices in some cases to less than 50% of
the original property prices has led to a flood of interest from overseas
buyers. The strengthening of sterling against the Euro is making property even
This tightening of credit is expected to continue as the
stock of properties available continue to fall and choice becomes more
restricted. Prices are at rock bottom and buyers should act quickly while there
is still choice amongst the bank properties on offer.
If you wish to get more detailed advice on the likelihood of
obtaining a mortgage on one of the bank properties please call our UK office on
+44 (0) 208 429 7115.