Mortgages To Counter Brexit On Valencia Property

A blog post specifically aimed at British buyers today. Let's not try to hide it away, Brexit has been a disaster for buyers of Spanish property from the UK. The spending power of the pound has been more than decimated and British buyers are looking to whether there will be a recovery, however slight, before exchanging their weakened pounds into Euros. If, as a British buyer, you believe that the pound will recover there are various options for you. The first obviously is wait until the pound rises, if indeed it does, before exchanging. The big drawback to this is that the property you want is likely to be sold and you will have to start your search again. However, today I am going to suggest something else that may work, a mortgage. Mortgages were difficult to come by in Spain until this year when the criteria for granting a mortgage to foreign buyers was loosened. Now banks are willing to give buyers mortgages for foreign property in the UK and Spanish banks are willing to finance foreign buyers at very attractive interest rates and conditions. Banks in Spain are currently offering mortgage from around 2% fixed rate with a term of up to 30 years. This of course is quite attractive for buyers of Spanish property. How does this work to help a depressed pound? Let's take an example of a 200,000 Euro property. The total investment is around 230,000 Euros with taxes, legal fees and notary. At today's rate to the pound that means an investment of around 210,000 Pounds sterling. Assuming a 70% maximum mortgage (Depending on circumstances, 60% may be more realistic for some buyers) A mortgage can be got for 140,000 Euros leaving a total payment of 90,000 Euros to find, around 80,000 pounds currently. The mortgage could be financed at 2% meaning a probable monthly repayment of 380-450 Euros more or less including capital or 320 euros interest only. The magic of course is if the pound does eventually rise from the ashes. Let's assume the pound flatlines or drops during the process of Brexit but then as promised by the Brexiteers a land of milk and honey appears and the British economy rebounds strongly. The pound would do likewise and probably go back to around the 1.30 level. After five years you may have around 130,000 euros left to pay (Or 140k if the original mortgage is interest only) AT 1.30 euros to the pound that would mean paying off 100k pounds sterling meaning the total investment would be 180,000 pounds plus a few thousand a year to satisfy the mortgage repayment, considerably less than the current amount required due to the low pound. Partial payments of a mortgage are free of charges so if you paid off 30k here and 40k there, it reduces either the monthly amount or the time period of the mortgage so you may decide to cash in 30k at 1.30 but feel the pound will go back up to 1.45 for example and wait until that point to pay off the rest. Financing in this way is so flexible. If however you believe the pound will continue to fall and fall and fall then get your money exchanged at the current rate guaranteed using our forward ordering feature in conjunction with our FX partner, and take advantage of the certainty this would give you. Any mortgage could then be paid off at today's rates rather than every payment being slightly higher due to depreciation of the pound. If you are interested in the possibilities of a Spanish mortgage then please contact us and we will put you in contact with our brokers who work with every Spanish bank offering mortgages currently. Other Options If you are sure the pound will rebound giving you more buying power then maybe you can do a deal with the owner to rent with an option to buy. This involves putting a deposit down, usually around the 10% mark and paying a monthly rental during a set time period, for example two or three years. During this time at any stage that suits you i.e, at any stage when the pound recovers sufficiently to make it worth your while, you can complete the purchase and usually all payments made are deducted from the agreed final price. Finding deals of this type is quite difficult at times but they are out there and if they can be found this can be a good way to hedge your bets, again guaranteeing the rate with the FX companies just in case of further falls but ensuring you can benefit at any point when a surge in the value of the pound would allow you to take advantage of the rate. If you want to talk about rental with options then again feel free to contact us.   So to all you Brits with the pound, of course, you may decide to wait until the pound rises again, you may have a long wait or not depending on what happens due to uncertainty. One downside of this is that certain prices have started to rise in Spain now and you may find that not only is the place you wanted now sold but other comparable properties are more expensive wiping out the gain of the pound. It's totally hypothetical of course but if you are determined to move to Spain then the mortgage and rent to buy options may well suit you. Or you could decide you are sick of being surrounded by an atmosphere of pure fascism and just make the move anyway ;-) Whatever you decide sign up to receive our mails here, they are infrequent and you won't be spammed to hell [wysija_form id="2"]