[Anonymous]

Hi all,

I’m doing some research into the mortgage market in Spain.

I’d like to get some feedback from anyone who has bought in Spain with a mortgage, or anyone in the process of buying and planning to use a mortgage.

I’d like to know at what point in the property buying process you first contact a mortgage lender.

The following is a fairly typical (simple) breakdown of the buying process into steps:

1. Contact estate agent
2. Discuss needs & budget
3. Select properties to visit
4. Visit
5. Negotiations
6. Sign deposit contract
7. Sign deeds

At what point in this process did you /do you plan put the step ‘Contact mortgage lender’? (just answer ‘step x’ or ‘between step x and step y’)

Thanks

Mark

[Anonymous]

Mark

….before our venture went all pear shaped!

We contacted lenders after the inspection trip. We knew we could get a mortgage, and thought as we were putting down 30% deposit, there would be no rush for a mortgage before we had agreed on an appartment/price.

[Anonymous]

Mark – I had a mortgage arranged ‘in principle’. When I discovered that there was no LFO I contacted the brokers who then replied saying that the Developer had “assured” them there is an LFO 😯 If I’d have gone ahead with this I would have lost a lot of money re: the broker’s fee, as when the time came for the bank to refuse a mortgage on the illegal property, their fee would not have been refundable.

This may be a welcome warning for others to read about.

[Anonymous]

Hi Mark,
I think it depends what type of process you are purchasing through and if its a resale, new build or off plan.
In my case, we used a “property finder” and looked and different options.
I did not want to pay in stages, the maximum i wanted to put down was 30% the rest to be by way of a Spanish mortgage. We bought off plan.
The builder we eventually went with agreed to our terms and we ensured our independent solicitor put a clause in the contract that we would only complete if the property was legal and that the Spanish bank would lend on it. We contacted the bank early in the process, and he was familiar with the builder and knew that the build would be ok. However the confirmation of the mortgage would only be done when the build was complete and all licences LFO etc were in place.
The build took 12 months as per contract, the property was valued at more than the purchase price and so I borrowed sufficient to furnish the property also.
All in all a pretty smooth transaction.
Hope this helps,
Leighton

[Anonymous]

the broker’s fee, as when the time came for the bank to refuse a mortgage on the illegal property, their fee would not have been refundable

The brokers fee is normally paid by the lender not the person borrowing, i.e. no loan no fee.

Regards

Paul

[Anonymous]

Hi Mark. Would rather not give this on open forum, hope that’s o.k.

We looked at properties in Cadiz province via the estate agent, then took all our documents (proof of income, UK bank statements etc) to a bank and got an encouraging response instantly for a small amount that enabled us to look in a higher purchase bracket.

From agreeing to buy, to mortgage approval was two weeks and we moved in in four.

Hope this helps.

[Anonymous]

We have a spanish mortgage on our house. After receiving our registered escritura (December 2005), we applied to our local Banco de Andalucia branch and got the mortgage in January 2006 but found out after 6 months of paying it that we had (have) an illegal house.
The Catastral information and the registry say the house is legally ours, but locally it has no permissions or licenses (something our lawyer failed to mention or notice) and so is technically illegal.
Our bank obviously did not check thoroughly enough either and granted us the mortgage. It even did it’s own survey/evaluation and knew where the house was.
July 2006 was the first we suspected of the house being illegal, a year after we signed at the notary (July 2005). We are still having to pay the mortgage.

[Anonymous]

What happened to make you suspect that your house was technically illegal?

Also, even without the necessary licenses and permissions, your house has been accepted onto the property register. Surely this has now made your house legal. Incidentally, I would love to know what was presented to the property registrar to make him accept your house for the register because they are usually quite vigilant as to their requirements (building licences etc). I know, for example, that an illegal property of four or more years old can be registered (and therefore legalised) with a certificate of antiquity provided by an architect. This is based on a statue of limitations in Spain that basically allows a property that has been built without permissions to be made legal after a period of four years provided that house hasn’t been built in a National Park or other sensitive areas.

I think that your house is no longer technically illegal now that it is on the property register 🙂 I would be interested in other opinions on this.

[Anonymous]

Hi Jasmine,
Unfortunately, we have been told that this IS the situation, we are the legal owners of an illegal property. We recently hired some independent lawyers (ie outside of the area, based in Spain and the UK) who have confirmed that there are 2 areas of property law that need fulfilling before a property is deemed fully legal. They have spoken to the Catrastral office, land registry and our local town hall.

I have been told recently, via another forum, that the ability to get a license of antiquity this way has been stopped. May be it is something our developers were counting on?! Our property was built in 2003 – ironic!

We have a house just outside Albox (need I say more?), bought in July 2005. We now know that it has been built without permissions, licenses etc on rural estate. The PGOU, which is currently under revision, is stating this. Our Catastral record says the land is urban, which it isn’t in reality. I dont know how the record shows this but I have my suspicions.

We only suspected it was illegal when we found that we would not be getting an electricity contract in July 2006. We were told that we had mains electricity but were on a builders supply until the developers had finished all the builds. Incidentally we have a water contract. We were asked to pay an anomalous and not previously mentioned connection fee by our neighbours (the developer), but this was not going to lead to a contract. They also were charging us for consumption without giving proof that they were/are paying for electricity themselves. They refused to write us a bill with rates, units or dates on for us to pay. They said, pay this amount (€932 for the year) or we cut you off. Which they have done (September 2006)!
Strangely, this amount has now been reduced to €530 but still no proof is forthcoming.

They then said that they have a “private agreement” with the electricity company concerning payment and they have a private transformer, so they maintain that the electricity is theirs and they can charge us (and our neighbours) anything they like. The electricity company are ignoring our requests for an investigation.

Having done some research (August 2006) and found that we were supposed to have received an electricity bolletin and license of first habitation upon completion of the contract (our lawyer seems to have missed this too). When asked for this, the neighbours initially said we could have the papers after the payment to them had been made. We now know that this was never going to be possible as they do not have permissions to build, let alone any licenses. The electricity company had confirmed that without these a contract is not possible eventhough we have an escritura. The town hall confirmed about the licenses when we went to see them with our escritura to try to obtain them retrospectively.

In addition, it is suspicious that we received our registered escritura only 5 months after signing when our neighbours who signed a month after us had not received theirs a year after they had signed. Our neighbours knew that we could not give them the balance for the house until we had a registered escritura (we needed a mortgage). Somehow, miraculously, the neighbour announced that we would be receiving it in December 2005 – as I say only 5 months after signing at the notary. Our lawyer was surprised too as he said that there were some people still waiting for registration to complete after 18 months! How was it possible? Again I have my suspicions. I dont believe that just constant nagging by our neighbour achieved this result.

What else can I say? If anyone knows anything different legally I would be interested to hear.

[Author]

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