September 13, 2007 at 9:15 am #53146
For those that are currently buying in Spain and will make the final payment with a mortgage here is a situation that has happened to my clients this week.
The bank in Spain (BankInter) agreed their mortage and gave them an offer in May this year. They bank had all their P60’s, payslips etc and were happy with their incomes. So they made their reservation and made their payment of 30% of the purchase price. The property is a 3 bed villa.
They were due to sign today, but on Friday last week the bank decided to withdraw their offer and make a new offer of 50,000 Euros less.
The have a yearly after tax income of 57,000 Euros and were borrowing 200,000. This is the first time in all the years I have worked in Spain that a bank has withdrawn an offer.
We have managed to get another bank (CAM) to agree the mortgage but this has only been done after they did a UK credit check. This is also the first time I have seen a Spanish bank run a UK credit check. They wanted to see all the couples borrowings in the UK including taking into account any morgtage here. Fortunately they dont have a mortgage in the UK so the bank will lend the full amount.
So I would urge anyone that is buying with a mortgage as the final payment to contact your sales agent or the bank and check that they will still lend the money.
September 13, 2007 at 9:24 am #74988
Solbank (Banco Sabadell) are now running UK credit checks for mortgages.
September 13, 2007 at 9:42 am #74990
This is also the first time I have seen a Spanish bank run a UK credit check.
I enquired about a loan to buy a car in Spain four years ago and they asked for a UK credit check so i don’t think this is a new thing.
was there a time limit on the mortgage offer?
September 13, 2007 at 9:58 am #74992
In my experience the majority of major Spanish banks are now asking for UK credit checks, however they have no direct access and ask the prospective borrowers to obtain it from the UK and supply copies for them. Rather sadly I have heard of certain individuals supplying fake experian reports for significant amounts of money 😡
September 13, 2007 at 10:05 am #74994
There was no time limit on the offer. They agreed all earlier this year and there has been no change in the couples circumstances. The bank explained they didnt have a problem with the amount they were originally lending on their incomes or on the property itself. They just explained they now dont have the funds to lend because of the current world financial markets.
We have been obtaining mortgages for years now from Cam, Inter, Banco De Valencia, Banco De Murcia and La Caixa and clients have never been asked for a credit check. Must be a sign of things to come.
September 13, 2007 at 12:27 pm #74997InezParticipant
Yes it is. Many banks have clamped down and some resufing to lend to non-residents, valuations being revised and some are not dealing with local brokers but request power of attorney to collect the paperwork themselves
This is all at the directive of the Bank of Spain who underwrites all the banks.
Also it is illegal (always has been but now enforced) to borrow more than 100% of the purchase contract price – so costs cannot actaully be included in the purchase. Notaries are asking for the contracts to lodge in case of reviews
Some banks have been hit very heavily with dodgy paperwork and are conducting internal reveiws, so more local arrests to come meethinks!
Answer is use a solid mortgage broker who knows his stuff and wont do anything dodgy – they also can sway banks legally in favour of the client and offer proper advice! And yes I am lucky to finally have found the one decent one I can trust knowing my clients will get the best possible advice wherever they buy in Spain!
September 13, 2007 at 1:20 pm #74999
This is all part of the oncoming global credit squeeze (it ain’t here yet), as lots of people in financial institutions are busy shuffling the deck chairs, denying to the bosses/central banks/regulators, their true levels of exposure). Don’t forget it’s not the ‘sub- prime losses (between 200 and 400 billion US$) that’s the problem. It’s going to be the loss of ‘Value’ to inflated assets (which huge debts are secured against) that takes place (too bigger number to guestimate) when sentiment and confidence collapse following the revelations which the market will expose. Having had 6 years or so of artificially low global I/R and lenders throwing money at anyone willing to borrow, with ever increasingly week criteria/risk premiums being applied, it was always going to end this way.
Thousands of UK buyers in the US are just discovering that trying to re-mortgage their properties is a different game in a falling market brought about by a credit squeeze. They are treated as ‘none conforming’ clients (sub-prime) just because they do not reside in the US irrespective of their financial position.
The unfortunate and feckless will lose their shirts and the rest of us will pay for in increased taxes and charges to help cover the losses and short falls.
Easy come but for millions of people it’s not going to be so easy go!
September 13, 2007 at 1:48 pm #75000
Yes, our lender (GE) is throwing lots of obstacles in the way at the moment. They have the facility to carry out the UK credit check on Experian and Equifax, I have seen it on my credit report!! After initially agreeing the amount, it was revised, revised again and then revised some more before being approved subject to valuation. All this has taken since 8th August so far!
All the other banks asked for copies of a recent credit report (within 3 months).
September 13, 2007 at 8:03 pm #75005mikeParticipant
Rather sadly I have heard of certain individuals supplying fake experian reports for significant amounts of money 😡
There are websites where you can buy wage slips. I think it’s very sad because those that buy such things obviously can’t afford the property they are buying and they push the prices up which mean other people can’t afford to buy property. It’s these kind of people who have led to liar loans and now greater bank vigilance which means that people literally in touch of reaching their legitimately earned dream has it snatched away.
I wonder how much all these ads for loans and programs telling stories of a life in the sun plus guaranteed capital appreciation on your investment has influenced some people who should not be lent a significant sum of money.
I hope those who were irresponsible get more than their fingers burnt and I hope those who were prudent and worked hard for their new life are able to get an even bigger property bargain soon, with no legal complications!
September 13, 2007 at 10:04 pm #75006
The same is in the UK:
The Bank of England has agreed to give emergency financial support to the Northern Rock, one of the UK’s largest mortgage lenders, the BBC has learned.
Sounds really bad.
Meanwhile all new golf fields at Murcia (Spain) are halted because there is not finance for it and surely also not sufficient buyers.
September 14, 2007 at 7:16 am #75008
I was online last night pulling out the last of my investments out of Northern Rock and I suspect that thousands of others were doing the same as their sight was incredibly slow to respond.
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