What are the costs of taking out a mortgage ?

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This topic contains 12 replies, has 9 voices, and was last updated by Profile photo of Anonymous Anonymous 10 years, 3 months ago.

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  • #52102
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi all,

    have read various posts and found some info on website searches, but I would really like to know how much arranging a mortgage and completing on a new build is going to cost.

    my solicitor hasnt been too forthcoming on values other than their fee of 0.6% which i understand is reasonable.

    however, surely there must be set values per town/region or is that too much to expect ?

    i found the post elsewhere which listed the taxes, nota simple on the mortgage etc, but is there a definitive list where i could be sure i have covered all the costs. I know i should allow 12-14% of the purchase price to cover all my costs. but in budgeting for ‘can i afford this’ i would like to be a little more sure.

    that said i am 90% of the way through a purchase at Senorio de Roda, other than the fact the ‘licence’ seems to now not exist i am keen to buy the house.

    i read posts saying ‘start applying early for a mortgage’ but other than get a few agreements in principle from different brokers who seem to charge quite a large fee 1500-2500 euro’s i dont know how far to proceed until the house is complete and ‘legal’ as surely the bank will not entertain any lending unless the property is 100% kosher.

    or should i be processing a mortgage application now in expectation that the licence will be forthcoming in the next few months.

    as it is, i am looking at the purchase for a minimum of 5 years maybe longer with hoping to take 10 weeks rental a year of about 350 euro’s average income per week for a 2 bed townhouse at Roda.

    any advice on any of the points above would be appreciated.
    sorry if it seems like a ramble but the more i read on these forums then the more i am put off the idea of completing.

    so far i have only put a deposit down on my furniture of a 1200 euros as well as the 3000 euro deposit. although my solicitor is ‘hopefully’ still holding my 30% deposit of 65,000 euros.

    Mark

  • #64517
    Profile photo of marios
    marios
    Participant

    When I took out my mortgage roughly 4-5% of the funds was deducted from the amount borrowed of the mortgage to cover (see reply below from halifax),it was a construction mortgage and towards the end of the build we got approx 1.4% back from the bank so you are probably paying in the end 3% of total funds asked for ie borrow 200,000€ fees as below 6,000€.this was with the Halifax,we did not have a broker if you did you will pay them a fee which you should ask them what amount before they go looking for a mortgage for you.I personally would not use a broker.

    According to provision of funds I would like to confirm you are paying taxes for the declaration of the property (obra nueva) 1% of the value of the construction and also for the mortgage (hipoteca), this is 2% of the initial amount required. The rest is a provisión to pay notary, registry land office and gestory office.
    This amount is a provision of funds, as soon as we receive the original tittle deeds register (this is two or three months from completion date) we will do the liquidation in your account.

  • #64536
    Profile photo of Anonymous
    Anonymous
    Participant

    Mark,

    I note you said “other than he fact the licence does not seem to exist”.

    Does this mean the property doesn’t have a building licence? If so, you won’t be able to get a mortgage. I can speak from experience in this matter.

    Hopefully I have misunderstood.

  • #64539
    Profile photo of Anonymous
    Anonymous
    Participant

    Mark – if you are referring to the Licence of First Occupation (LFO) not existing, I would suggest you are very careful. You cannot apply for electric and water connections from the appropriate companies without an LFO.
    Until an LFO is forthcoming, the developer will offer to put you on their builder’s supply for water and electricity.

    If you are seriously thinking of renting, be aware that with the builder’s supply there can be low water pressure due to overload of use, and powersurges/low voltage re. the electricity,. At worst – cut-offs for both at times.
    Builder’s supply is notorious for not being dependable and can even be dangerous (electrical fires have been known).

    Does not make for a happy holiday-maker renting from you 😥

    Sorry about the doom and gloom, but there are those on this forum who have lived through the reality.

    Barbara

  • #64555
    Profile photo of Anonymous
    Anonymous
    Participant

    the licence that is missing is the actual one to approve the build !

    it seems the developer applied for outline permission which was granted but never submitted full plans.

    now it has come to completion for a number of properties and the town hall have become aware of the fact and have put a halt on proceedings while the plans are ratified.

    I know of a few people that have moved in already but have not paid their 70% balance as they need a mortgage like me, but they have signed an agreement to pay as soon as the licence is approved.

    Had i known about this before and it was a specific question i asked the agent “does this development have all the approvals” then i would not have put a penny down regardless of how lovely the houses look.

    When i put the 3000 euro down i was given a document with various licence/approval numbers , parcela etc etc which i took to imply were all valid. As i was over on a 4 day tour and this was the 4th day then i didnt have the time to find out from the town hall if these were valid or not.

    caveat emptor strikes again !

    Mark

  • #64558
    Profile photo of Anonymous
    Anonymous
    Participant

    @Mark of Loxley wrote:

    When i put the 3000 euro down i was given a document with various licence/approval numbers , parcela etc etc which i took to imply were all valid. As i was over on a 4 day tour and this was the 4th day then i didnt have the time to find out from the town hall if these were valid or not. Mark

    This is a prime example of why these “inspection trips” should be banned and why I wish it was possible to warn other people of these examples by means other than forums like this one, eg, by huge hoardings at airports etc . Whilst this forum is excellent, only people who search it out can learn valuable lessons. Maybe it could say:

    “If you are even THINKING about buying a property in Spain, make http://www.spanishpropertyinsight.com. your first port of call “

  • #64561
    Profile photo of Melosine
    Melosine
    Participant

    Have to agree. Not just with inspection trips either. It seems to be a ploy used by many in Spain. Private vendors as well .Nothing seems to happen until just before returning home.
    Excuses include…local fiesta, mislaid paperwork,agent cancels appointment due to emergancy..etc.etc etc. Been through it all.

  • #64562
    Profile photo of Anonymous
    Anonymous
    Participant

    The thing was, i did do quite a lot of searching before i went out.
    but didnt find this site, in fact i didnt find any forums until AFTER i returned ! As it is I have only found this site this week ! Although I have been using another Forum with a specific section on my development at holidayforums and it was someone on there who recommended this forum.

    I guess it was because i was more specific on my searches when i came back, but by then it was too late.

    The funny bit is, i was totally disillusioned by what i had been shown for the first 3 days of the tour although i did really like the area of Murcia around the Mar Menor. It was only when i went to the development at Roda that i changed my mind and was keen to buy as it looks a really lovely urbanisation as it is 90% complete and so it was easier to be drawn in than just an ‘off plan’ model/drawing.

  • #64563
    Profile photo of Anonymous
    Anonymous
    Participant

    Mark wrote:

    The funny bit is, i was totally disillusioned by what i had been shown for the first 3 days of the tour although i did really like the area of Murcia around the Mar Menor. It was only when i went to the development at Roda that i changed my mind and was keen to buy as it looks a really lovely urbanisation as it is 90% complete and so it was easier to be drawn in than just an ‘off plan’ model/drawing

    .

    Mark, that is their ploy!!!! Show you the really grot, boring stuff then show you the project they REALLY want to sell. Your hooked. Don’t feel bad… it happens to plenty of us. 😉

  • #64612
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Mark

    in answer to your question the costs of taking out a Spanish mortgage can vary according to the bank you are with and also whether the agent involved is taking a commissionon the mortgage. Usually you should only pay a maximum of 1% for a mortgage opening. You only need to ask the bank to reduce these costs and yu will find a lot of them will behappy to do so.

    You will also be paying a second notary charge. When you buy a house with the mortgage the first notary transaction you do is to sign the mortgage escritura. This then confirms the funds available. You then sign the second esritura for the actual house purchase.

    In all you should expect to pay around 12% on the total declared value.

    Note: THe eventual figure will vary according to which bank you use. Ask your bank what their charges will be. Also your solicitor should give you a fairly accurate breakdown of the costs involved – if not take your business elsewhere because he is not doing his job very well.

  • #64616
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Mark
    Take a look at the Barclays Bank Spanish website, it gives a good overview of all the costs involved, they have a pretty good rate in comparison to Halifax, but for both you have to pay 1% for the privelige of a mortgage, surely this must change in the future…

    On Barlcays site there is also a guide you can download for all the Licenses required…this will send a chill……

    Hope this helps under the circumstances…

  • #64620
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Mark,

    You can negotiate with all the banks.

    I managed to get the following from Barclays :-

    Maximum 70% of the purchase price.
    Interest rate: euribor + 0,75%
    Arrangement fee: 0,65%
    Total early settlement fee: 1%
    Commission over the additional capital rapayment: 0%

  • #64761
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Mark,

    You can negotiate with all the banks.

    I managed to get the following from Barclays :-

    Maximum 70% of the purchase price.
    Interest rate: euribor + 0,75%
    Arrangement fee: 0,65%
    Total early settlement fee: 1%
    Commission over the additional capital rapayment: 0%

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