Since the changes to the mortgage tax rules in Spain back in November 2018 (actos juridicos documentados), which are now in favour of the consumer rather than the lender, we at Fluent Finance Abroad have been busy working on a re-mortgage package specifically designed for clients who are not happy with their current Spanish mortgage terms.
In order to establish whether a client is eligible, we would first review the terms and conditions of their current mortgage contract to see what type of deal is currently in place and determine whether we would advise a move or not. You may already be on a great deal so there would be no point in changing unless you were really unhappy with your current lender.
A client approached us recently as he wasn’t happy with the mortgage arrangements he had in place.
The service from his bank wasn’t what he wanted and he had been forced into buying an extremely expensive life insurance product, which he paid for on a monthly basis. This amounted to a premium of €1,440 per annum for €145,000 worth of life cover, which is excessively high.
We actually used his case as a test run and are happy to say that we secured approval for a mortgage application with the following terms.
The client is happy with this deal as the new deal does not oblige holders to take out any extra products, so he no longer has to pay €1,440 per annum on life cover and he moves away from a bank that doesn’t offer him the level of service he requires. Deals approved subject to status and a satisfactory property survey!
Below we break down the basics to explain what should be taken as a minimum to obtain the best margin above Euribor:
* Amount borrowed: €145,000 – Straight remortgage like-for-like with the amount already in place, no extra lending approved
* The term: Length of mortgage to coincide exactly with the term already in place with the existing lender, in this case 25 years and 6 months
* Bank opening commission: 0% for FFA client applications
* Notary fees etc.: All costs associated with the new lending are paid by the lender, apart from the valuation survey
* Fixed rate interest: 1.55% for the first 12 months
* Following months: The margin above Euribor thereafter is a maximum 2.10%
However, this can be discounted if the client takes on bank products, none of which are obligatory. We recommend clients should consider moving bank accounts and taking the bank’s home insurance policy to obtain a minimum discount of 0.60% lowering the margin above Euribor to 1.50%.
– Salary bank account: 0.5 discount (recommended)
– Home and contents insurance with the bank (recommended)
– Life insurance: 0.1 – only recommended if there is a life insurance need i.e. if you have a young family to look after
– Credit card with annual consumption of €1,200 = 0.1 – (we would need to assess the product and read the small print)
– Taking out a pension plan gets you a 0.2% discount, which might be worth considering as prudent financial planning.
– Car insurance 0.1 – this all depends on the cost and the covers that the policy offers
– Private medical insurance (this bank works with Sanitas) 0.1 – again all dependent on cost
– Investment incentive of 0.1 discount for a minimum fund investment of €30.000 – personally I’d rather bring down my mortgage if I had a spare €30K rather than invest it with a bank here in Spain
Now this bank insists that they will only consider applications for long term Spanish tax residents (of 3 years or more) with an impeccable payment track record of at least 12 months and importantly each application must stack up in terms of declared income!
This product is only for main residence properties and not for second home or commercial lending.
If you have any questions or are interested in a free mortgage assessment, then please feel free to contact Fluent Finance Abroad and we can assess if moving lenders is the right thing for you.