Releasing Equity from Spanish Property – pros and cons?

[AnonymousParticipant]

Hi all,

I have mortgage for spanish property in Ireland. I am thinking of releasing equity from my spanish property and paying this amount of Irish mortgage. The reasoning behind this is the interest rates in Spain are substantially lower at present and for the foreseeable future. I am thinking of renting out my property longterm – the logistics of having a mortgage in Spain make more sense than having the mortgage in Ireland. I realise there are costs involved and that I would only get 60% of current vaulation. I would be grateful for any advice.

Many thanks

[AnonymousParticipant]

Generally speaking it make sense from what you say. However in the long run I have more confidence in the Irish economy mending than the Spanish

[AnonymousParticipant]

Hi Shakeel,

I agree about the economy – property prices have beeing dropping here for last 3 years and have dropped now by 50%. The lower end of the market here E80,000 E180,000 has stabilised and these properties are now selling again – the higher end E300,000 over have still a bit to go yet. Property prices won’t be rising here and will probably flatline for some time. Spain was still building properties last year and still has a good bit to fall. If I sell my property in Spain now, I will be taking a huge drop whereas if I hold off for 3 to 5 years – I won’t get what I paid for it but a bit nearer than I would now.

Many thanks

[katySpectator]

Many on the costas have been scammed by equity release schemes. Lots of info’ here

http://www.costa-action.co.uk/

I personally know a widow who had to return to the UK last year having lost her home through an equity release. Seems the only ones who got the “equity” was the lying, cheating financial “advisors” 😈

[AnonymousParticipant]

@katy wrote:

Many on the costas have been scammed by equity release schemes. Lots of info’ here

http://www.costa-action.co.uk/

I personally know a widow who had to return to the UK last year having lost her home through an equity release. Seems the only ones who got the “equity” was the lying, cheating financial “advisors” 😈

Not wanting to split hairs Katy but I think you will find its lying, cheating financial “advisers“

[AnonymousParticipant]

I believe that in Spain the mortgage & equity release market is totally unregulated, in the UK the market is regulated by the FSA. Safe Home Income Plans (SHIP) was launched in 1991 and all SHIP member observe a code of conduct over and above the FSA regulations. All SHIP plans carry a no negative equity guarantee. This means customers will never owe more than the value of their home and no debt will ever be left to the estate.

[katySpectator]

@jiminspain wrote:

@katy wrote:

Many on the costas have been scammed by equity release schemes. Lots of info’ here

http://www.costa-action.co.uk/

I personally know a widow who had to return to the UK last year having lost her home through an equity release. Seems the only ones who got the “equity” was the lying, cheating financial “advisors” 😈

Not wanting to split hairs Katy but I think you will find its lying, cheating financial “advisers“

So it is 🙄 well pointed out by a financial adviser…sure it will make all the difference 😆

[AnonymousParticipant]

Hi guys,

If anyone has advise against it or for it I would be grateful and if anyone has had a good experience with mortgage brokers. I take on board what you are saying about banks being regulated in UK and I presume Ireland – let’s say that in the case of Ireland – the regulator was not doing his/her job during the boom years and taxpayers have been left with the huge bill and now the banks are raising rates here when people are taking wage cuts if they are lucky to have a job. But thanks for the pointers I will take them on board!

[katySpectator]

You would be better contacting the banks yourself (or browse on the web). Mortgage brokers charge a lot of money for finding a deal that is more suitable for them (ie. commission) than the client.

[InezParticipant]

Its not really an equity release you are looking for but a simple mortgage. Even though you bought effectively for cash, you will have fees to pay, taxes etc.

Also if you go to banks then be careful what you state you want the money for as usually its only given for the purpose of buying a property, which you have already done! They dont really do loans for refurbishment works etc.

I undestand what Katy says re financial advisors (and no, none are regulated as there is no such regulatory body on an agent) but there are some good ones who can not only give you free initial good advice, but the ones who traded correctly with genuine clients and didnt try to get 120% mortgages, are in good standing with the banks they use and will know how to present your application so you dont get rejected on the above point.

You will need to prove income etc. Good luck

[AnonymousParticipant]

Hi Inez,

Thanks for that!

[katySpectator]

Will you have any equity left as the banks are coming out with low valuations? Then there is fees for the Broker, fees to redeem the old mortgage, about 1% to take out a new mortgage. Take care 🙂

[AnonymousParticipant]

Hi Katy,

Yes if I was to do this mortgage I would get 60% of currentl valuation. I purchased for E214,300 back in 2005 – now current valuation approx E180,000 so equity release would be E108,000 max. The charges, commission to do this coming in at around E6000 – hefty! Either that or sell my property now or do equity release, rent it out longterm and wait 5 years. At which stage you are not guaranteed you will get your money back either.

Many thanks for advice though really appreciate it – always nice to have a bit of backup!. 🙂

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