The cost of buying a Valencia Property has just gone down if you are buying with a mortgage. Prior to last month if you got a mortgage with any of the Spanish banks then you had to pay not only the costs of the purchase, including the 10% property purchase tax, but also the costs of formalizing the mortgage with a Spanish bank. In other words you paid for the privilege of having a Valencia Property Mortgage although the bank itself was the beneficiary in case of non payment, ie, they could repossess the property and they received a monetary compensation every month, ie, you paid the mortgage to them.
The new Spanish government has changed the law so that it is now the banks who have to pay the taxes and fees associated with drawing up a Spanish Property Mortgage. On a typical mortgage of around 150k, depending on the region of Spain, this could mean you can save over 3000 euros. Obviously the higher the mortgage, the more you avoid having to pay.
In Valencia, the tax on mortgages is 1.5% (IAJD). This alone means a saving of 2250 Euros. When you add the notary, registry and gestor costs along with the cost of the valuation this will mean over 3000 Euros that the bank would now have to pay rather than the client who takes out the mortgage. There is likely to be an effect on the interest rates offered by the banks although competition in the sector suggests that up to now the conditions offered by banks have remained roughly similar since the ruling came into law.
We spoke with Katherine Walkerdine, MD of Mortgage Direct SL, about their experiences since the change in the law and she said, “Some banks have increased the interest rates they offer to clients and they are losing out on clients to other banks as the majority have not made any changes.
At Valencia Property long term we would expect the bank to take some of this money back by increasing the opening commissions on a mortgage or increasing the percentage rates on a mortgage. You are free to reject those terms though and remember the banks don’t earn as much money without the mortgage business, it is one of their biggest earners, so expect them to be negotiable.
What this means for you as a buyer is that if you decide to buy a property of 200k with a mortgage of 120k, 60% of the value of the property, your costs are reduced by around 1.5%.
More Good News On Spanish Mortgages Upcoming
If you have previously taken out a mortgage on a Spanish property many of the costs associated with that mortgage can now be claimed back from your bank and we will have more news on that at the start of next week with a new service for our clients to recover costs paid out on past Spanish mortgages. We have already spoken to our last three clients who took out a mortgage and they are all keen to start the process of recovering their costs. If you are interested in knowing more about recovering your money then let us know by sending us a mail and keep an eye on the site where we will have a new page at the start of next week with all of the details of what you need to do to get the costs back.
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