Don´t lose your deposit!

Using a Spanish mortgage broker can save you a lot of time, problems and in some cases a lot of money! Buying with a mortgage in Spain means at some point you have to pay a deposit, usually 10% of the purchase price. An average purchase price of 200,000€ means that you need to pay over 20,000€. What many purchasers don´t realise is that in Spain, regardless of what anybody tells you, be it a mortgage broker, estate agent or a bank, no one can guarantee that you will get your Spanish mortgage until you have actually signed for it at the notary. A “decision in principle” is NOT LEGALLY BINDING and banks can cancel your mortgage at ANY TIME for any reason.

An experienced mortgage broker can ensure that your deposit is never put at risk by advising you on your mortgage options, your purchase contract and by knowing what to do in the event that a bank does change their mind about your mortgage approval.

Dual Pricing – getting the best deal

Several lenders have in recent times implemented a “dual pricing” policy whereby their actual headline rates and product features differ greatly between what is actually offered in branch.

This occurs quite often with the headline interest rate which may be advertised at Euribor+1.5% but at branch level the mangers have free reign to increase these amount or switch to the more profitable “IRPH” model.

The same thing happens with the mortgage arrangement fee which all Spanish mortgage lenders charge. Typically they are between 1.0% and 1.5% but again, local branch managers are free to increase this as they see fit. The reasons for this are that they are set sales targets on all sorts of products – life insurance, cash deposits etc and are under increasing pressure to deliver on these targets.

Cross selling and unfair terms

Non resident mortgage clients often suffer from unfair mortgage terms when they are dealing direct with a Spanish bank or having their mortgage arranged by an estate agent (whose primary concern is getting you any mortgage so they can get paid) and non-residents are often seen as an easy source of cross-selling and a quick way to boost profit in the branch – for example:

National or “official offer”

  • 80% of purchase price
  • Euribor+1.4%
  • Opening fee of 1%
  • No compulsory products

Local or branch level offer:

  • 60% of purchase price
  • Euribor+2.0%
  • opening fee of 1.75%
  • Compulsory life insurance (up to 1,000€ per year) and compulsory amount of cash left on deposit and inaccessible for 18 months
Sourcing directly from head office

Given that we as a company do not rely on local branches and source our mortgage products at a national level we can, for the most part, offer more competitive products than if you were to go to the branch directly.

We can also ensure that this cross-selling of insurance products does not occur the day before you are supposed to be signing. This is often the way it is done and these “surprises” can be sprung on unwary customers when they least expect it with a shrug of the shoulders and a shake of the head given to those clients who protest.

Applying at random is not effective

Another obvious reason to use a mortgage broker in Spain is that we know which lenders you are simply not going to qualify for. When you have signed a purchase contract, paid a deposit and are up against a deadline, waiting 4 or 5 weeks only to have a bank reject your case can put you under immense pressure with the vendor/developer. With know way of knowing what profile of client a banks is looking for and more importantly what type of clients they almost always turn down it really is pot luck. With a 10% deposit on the table this can become a foolish and very expensive gamble.

We can select the lenders that are most likely to make you an offer, have all of your documentation submitted, correctly, first time and an offer on the table without the fuss and the hassle and randomness that occurs when you are trawling around Spanish towns trying to do this yourself.