# getting a spanish mortgage while paid by UK company



## markjd (Aug 1, 2008)

When we move to Spain shortly we are considering paying ourselves as a Uk employee for 6 months as the tax is lower and company contributions are lower, this also gives us time to get our heads round either having a company office in Spain or just working for the UK company and paying Spanish tax and social security.
One thing we were not sure about is if we pay ourselves on the UK system would we be able to get a mortgage from a Spanish bank?

any advice would be greatly recieved

Mark


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## chris(madrid) (Mar 23, 2008)

The way to get money from a Bank is prove you can repay it or don't need it. 

I had a chat with my bank manager a few weeks ago about all sorts of things and one thing he commented was they've been told to be VERY CAREFUL about mortgaging RECENT ARRIVALS and deals where both parties are non-Spanish. they've had several "runners" apparently.


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## markjd (Aug 1, 2008)

hi chris, i take it you mean people have got mortgages and then done a runner? not sure how that works as i thought when the sale is done the bank sends the money to the sellers solicitor.
I don't no if it will be a poblem for us as we will be putting down a large deposit, i see were you are coming from you think they were working together to rip off the bank?

thanks for the advice


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## chris(madrid) (Mar 23, 2008)

markjd said:


> i see were you are coming from you think they were working together to rip off the bank?


Not think - it happened at least once. Seller gets his money and goes home - Buyer simply disappears leaving bank holding a value diminished property in a depressed market. 

It's easier to chase down if they're within the EU (esp € zone) naturally. The examples I was given were not Europeans.

Does your UK bank have branches here?

We put down 30% on our place - And we deliberately did this to keep the mortgage low. But to be fair our mortgage came from a place we'd held accounts here even though we were in Germany for a while, and tbh my then salary was high too. It can often be tough if you've not been resident 6 months, I'm told. But then we were lucky to find the place we wanted within 5 days of arriving and it was empty - still took 3 months.


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## Stravinsky (Aug 12, 2007)

Of course you will be paying NI payments into a system you cant use as well. As with any mortgage you will need to prove your earnings. As a company director I remember how difficult it was in the UK to get mortgages as I had to provide up to date accounts for the company and all kinds of crap. If you add to that your earnings are in a foreign country, and also the current market, I'm guessing you might struggle a little.

But who knows!


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## chris(madrid) (Mar 23, 2008)

As an aside - It can be awkward for AUTONOMOS to get mortgages here too. Some while back one of the missus colleagues left to work with her husband in their thriving small business (plant-nursery). Even so was hard for them to get a mortgage as their income was not "regular". Eventually iirc they lived in a caravan "onsite" then eventually bought for cash.


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## crookesey (May 22, 2008)

You might do well to obtain an offer in principle whilst you are still in the UK. There are plenty of specialist overseas mortgage brokers and banks with a presence the UK that a google search will bring up for you.

You will still have to prove that your circumstances are the same as those that brought forward the offer in principle, but at least you would know how much you have to spend before you go shopping.

Spain is not imune to the 'credit crunch' but IMO they have a far more sensible approach to lending than the UK. They tend to like a large deposit so borrowers treat their mortgage repayments seriously, and if they dont they have a far better chance of recovering their money than UK banks that were lending up to 125%.


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## markjd (Aug 1, 2008)

we will have more than 50% of the cost of the house, we don't have personal accounts in banks with branches abroad only the business account with abbey, i don't know if this helps?
we keep the business and personal sperate, the wife will be an employee of the company on PAYE, either as uk for tax or spain, i will employ her and she will get the mortgage and not link the business and mortgage.


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## SunnySpain (Jul 30, 2008)

Hi there,

I would think you would have no problems whatsoever if obtaining a mortgage if you are willing to put down 50% of the value of the property.

Whether or not you obtain them mortgage in the UK or Spain depends on your situation. If you don't have a property in the UK already, then UK lenders will not touch you with a barge pole. But if you do have a property in the UK, then you should have no problems whatsoever.

It may however be more sensible to rent for a year and make sure its what you really want to do and that way you can gather more information about where you want to live whilst living in Spain.

The Spanish housing market is stagnant right now, but thats largely due to the fact that not many people have the money to buy and even less have the option to put down 50% of the value of the property.

If I were a lender and you came to me asking for a mortgage with a 50% deposit to boot, I would bite your hand off (so to speak).

Saying that even if I had the money, I would never put down 50% of the asking price, as you would be playing into the hands of the lender. The idea makes me cringe quite frankly, why not put down what you need to in order to get the mortgage E.g. 30% if its with a UK bank

Regards, Dave


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## jojo (Sep 20, 2007)

We looked into getting a Spanish mortgage a few months ago and what we found was that because my OH is self employed in the UK, we would need to provide the mortgage company with 3 years of accounts clearly showing the ammount of income tax paid. We were looking at putting down 60%. It was agreed in principal. 

We also looked into self cert mortgages, but because of the credit crunch, the Spanish banks werent keen. 

Our English bank wouldnt give us a mortgage on a spanish property as they said it wouldnt be easy to repossess (!!??) and we found that the International banks had a much higher interest rate than anyone else!

So, although we could have got a mortgage, we decided with all the extra costs ( you have to pay 2% here, 1% there. The Spanish lawyers, who, unlike the UK charge a precentage of the house price to do the conveyancing), it was gonna cost as at least 50,000 euros to just finance the mortgage and paperwork. then there was the state of the world finances (and ours lol), we'd be better off renting for now and keeping our UK property and its mortgage!!.

We were actually planning to do a straight house swap - our UK house for a place in spain - we thought it would be cheaper and simpler - NOT!!! Interestingly, I would guess that our UK house has probably dropped in value since then (April) and is still dropping!???? while the spainish house we were gonna get has just sold for the asking price!!

Jo


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## Goldberg (May 24, 2007)

My advice is to do things correctly and dont try to dodge the spanish tax laws. If you are living and working in a foreign country you have to pay tax there, if you dont and want to save a few pounds and pennies here and there you will get found out, and have to explain alot and probably be fined for fraud.

So do things legal, ethical and correct or face consequences. Not everything in life is about money, think about doing things right, in my opinion.


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## Goldberg (May 24, 2007)

If you need to talk about legal and fiscal affairs speak to Dr Crespo & Partners - International Lawyers, SRL, he can advise you, but be sure if you live and work in Spain, you pay your social security in spain, taxes in spain.

Of course you can get spanish mortgages if you are uk resident, hundreds of thousands of people do, but when you try to get smart or try to not pay your taxes in the country you were suppose too, then you will be fined or at worst sent to prison, which is not the ideal way to start in a new country.

Spanish authorities are not stupid, the banks will ask questions and if you are found to be behaving inappropriately then there are possible repercussions.

The easiest and best way is to be honest and honorable. Better for your state of mind (there is enough to think about) than to duck and dive, again in my opinion.


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## markjd (Aug 1, 2008)

wasnt trying to fiddle the system, i run my own business in the UK, i know from the way my business works (run a recruitment company) that the people i find for my clients who work abroad if they work for less than 12 months in that location the UK tax them, i think this is wrong because some of the people i supply work in countries who would benefit greatly from the taxes.
My main concern if we are moving out with intention of staying but cant say for sure, not sure wife is 100% with this might not like it which is why renting for 6 months.
Plus if i get all our own stuff done we then have to get all the company stuff done which is going to take a long time and is complicated, the company will have a lot more costs involved and the contribution for social security is my only gripe as its extortionatly high at more than double the UK


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## Goldberg (May 24, 2007)

Speak to a professional.

Try Dr Crespo & Partners - International Lawyers, SRL he is good, cheap/good value, and tells the truth.

He should be able to tell you what you can do, cant do, how you can minimise your costs, etc, he will talk from your perspective. It is not a straightforward matter. good luck.


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## Pasanada (Feb 5, 2008)

We have a Spanish mortgage (Banesto) despite both of us working abroad (UK and the UAE) We had to supply proof of income (4 recent pay slips)

I would insist on anyone purchasing a property in Spain to obtain a mortgage (even a very small one) as banks tend to make more thorough checks on the legalities of properties, lawyers tend to just skim the surface. We bought off plan, without the mortgage, we would never have known our house was illegal if it wasn't for our bank (something the lawyer didn't pick up on!) and were at risk of having our house demolished if the local Ayuntamiento wanted to!

Please, please, please, do your homework, check, check and check again on documents and if you're not happy, get a 2nd opinion! Its worth it to save possible heartache in the future. Also, use a lawyer who is independant to your Estate Agent.


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## jojo (Sep 20, 2007)

Pasanada said:


> I would insist on anyone purchasing a property in Spain to obtain a mortgage (even a very small one) as banks tend to make more thorough checks on the legalities of properties, lawyers tend to just skim the surface. We bought off plan, without the mortgage, we would never have known our house was illegal if it wasn't for our bank (something the lawyer didn't pick up on!) and were at risk of having our house demolished if the local Ayuntamiento wanted to!
> 
> Please, please, please, do your homework, check, check and check again on documents and if you're not happy, get a 2nd opinion! Its worth it to save possible heartache in the future. Also, use a lawyer who is independant to your Estate Agent.



I second that, the mortgage companies are very thorough about property legalities and we were advised to gat a small mortgage even though we didnt need one, just to get the benefit of double checking the properties paperwork

Jo


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## crookesey (May 22, 2008)

Pasanada said:


> We have a Spanish mortgage (Banesto) despite both of us working abroad (UK and the UAE) We had to supply proof of income (4 recent pay slips)
> 
> I would insist on anyone purchasing a property in Spain to obtain a mortgage (even a very small one) as banks tend to make more thorough checks on the legalities of properties, lawyers tend to just skim the surface. We bought off plan, without the mortgage, we would never have known our house was illegal if it wasn't for our bank (something the lawyer didn't pick up on!) and were at risk of having our house demolished if the local Ayuntamiento wanted to!
> 
> Please, please, please, do your homework, check, check and check again on documents and if you're not happy, get a 2nd opinion! Its worth it to save possible heartache in the future. Also, use a lawyer who is independant to your Estate Agent.


Well I thought that I had done a good job on my research but totally missed the 'small mortgage' security advantage. What would be the minimum loan and term that they would offer? Do they invoke early repayment penalties, and can you pay annually?

We are very likely not to have any earned income to provide proof of. My wife will be able to prove circa £8000 P/A in guaranteed pension payments whilst none of my pensions come into force until 2012, but will have investment income to live on in the interim. I suppose that if they would give say, 2.5 X my wifes pension income (£20,000) they would conduct the same checks that they do with larger loans, it's the security, not the amount that interests me. As we expect to pay circa £200,000 a 90% equity stake should convince the bank that we are serious players, we will also need a Spanish bank account so could do that with them to.

It is very likely that we will defer going for Spanish residence status until we have settled all our UK affairs. We will probably initially opt for 59 days in Spain and 59 days in the UK etc; etc. A mortgage would have to be on the basis of us being UK residents and UK tax payers, so any advice you guys can give would be greatly appreciated.


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## chris(madrid) (Mar 23, 2008)

crookesey said:


> Well I thought that I had done a good job on my research but totally missed the 'small mortgage' security advantage. What would be the minimum loan and term that they would offer? Do they invoke early repayment penalties, and can you pay annually?


Right now - it may be difficult GENERALLY to get any loan until you've been here a while.


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## crookesey (May 22, 2008)

chris(madrid) said:


> Right now - it may be difficult GENERALLY to get any loan until you've been here a while.


I won't be applying for a residents mortgage if I buy now so won't be there at all, so to speak, as I will need a couple of years to sort things out over here. The Spanish arm of the Halifax are offering none resident Spanish mortgages with UK application. The only trouble is their minimum loan is 50,000 Euros, I would only want a 25,000 Euros loan for not more than 5 years and preferably with no early repayment penalties.

I wouldn't think that any bank would worry about lending 10% loan to value, if so the Spanish mortgage market really is in a bad way. I don't need it anyway, just liked the idea of the bank checking the legals out.

Anyone got any ideas?


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## Pasanada (Feb 5, 2008)

Whilst I think it's a great idea others sharing their experiences, I do believe it's wiser to obtain proper financial advice before making such important decisions. I've seen too many people take on more than they could afford due to listening to the "bar room lawyers" and see their dreams of life in the sun become a living hell.

If you have banking questions, seek advice from a bank, they will have answers to all your questions.

Good luck to everyone seeking a new life in the sun, but don't leave common sense at the airport!


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## chris(madrid) (Mar 23, 2008)

Banks LEND money to make money - it's not a philanthropic gesture. Small short term loans means no guaranty of income - NOT what their stockholders want right now.

Free cancellation is a risk of loss of future earnings - esp on a small short term mortgage. They'll want to make sure that all profits cover any costs. You expect them to research the risks of the property - THAT has a cost and they want their money back. 

25grand is PEANUTS to a bank. 50 is hardly worth bothering with right now. If you asked for 100plus - then opened a long term deposit with the cash and DID NOT TOUCH IT. Used it ONLY to pay the Mortgage. Then they might well play ball. But you'll be well and truly locked down. 

25,000 at 5% over 5 years results in 6500 (guestimated) approx for the bank in interest - less tax and costs (which are not the same here as the UK) - They'd lose money. 

25,000€ - are the sort of loans they dish out for CARS. I know of folk taking out loans that size for Harleys. 

SPEAK TO BARCLAYS TOO about Spain


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## jojo (Sep 20, 2007)

chris(madrid) said:


> Banks LEND money to make money - it's not a philanthropic gesture. Small short term loans means no guaranty of income - NOT what their stockholders want right now.
> 
> Free cancellation is a risk of loss of future earnings - esp on a small short term mortgage. They'll want to make sure that all profits cover any costs. You expect them to research the risks of the property - THAT has a cost and they want their money back.
> 
> ...


When we were searching for aq spanish mortgage, we found that without exception they all wanted between 1% - 2% of the mortgage value up front for their admin costs.

Jo


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## chris(madrid) (Mar 23, 2008)

jojo said:


> When we were searching for aq spanish mortgage, we found that without exception they all wanted between 1% - 2% of the mortgage value up front for their admin costs. Jo


And I'll bet you were not talking about 25grand. There's a minimum. Right now the banks are looking for secure business (i.e. lots of solid income). 

As I've said before they're VERY nervous about expat->expat sales too. This comes from the banks/cajas we deal with.


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## crookesey (May 22, 2008)

I know very little about the Spanish baking culture but have spent 25 years working within the UK financial services sector (please God don't let it be 26).
UK banks are target driven towards 'new customers', they want the first year students account even though it costs them money, in the hope of keeping it when he/she has graduated and is earning mega bucks.

Nearly 20 years ago I was approached by a very wealthy guy who wanted a £500,000 mortgage on a £750,000 manor house situated next to the airfield where he kept his private plane. I approached a regional manager of the Halifax and put the case to him, it stacked up on income, credit record etc; However it was declined because a) it used up a large percentage of his monthly lending allowance, and b) because it only went down on his target record as one mortgage. His bank, that initially weren't interested ended up doing it as they didn't want to run the risk of losing his account.

So what is best for the bank, one 100,000 Euro mortgage or four 25,000 Euro mortgages? It's the latter everytime, four valuation fees, four new bank accounts, four buildings and contents policies, possibly four car insurance poicies and four car finance deals, a couple of credit cards etc; etc. All that they do is buy in the money that they lend and make around half a spot on it. They love the idea of say four £1,000 set up fees intead of one and the three extra ancillary sales opportunites.

To test Chris's theory to it's absolute ultimate which is best for the bank, ten 2,500,000 Euro mortgages or 1000 25,000 Euro mortgages? Remember it doesn't cost the bank a penny to check out a property because it is the borrower who pays for it, and the bank makes a profit on it. I have an idea that larger LTV loans will cause the bank far more concern than very small LTV loans, particulally in the current financial climate.

And as for a bank losing money on a 25,000 Euros mortgage, they can't, the profit is in the rate they charge, so as long as repayments are made on time they make their profit in line with the rate that they set. If someone with say, a £10,000 mortgage balance and a good payment record wants £25,000 to make improvements to their home do you think that they would be refused a further advance because they weren't borrowing enough? 

Sorry if I sound like a 'know it all', but I do know quite a lot about the industry that I have been involved in for the past 25 years, as I should. All that I have attempted to do is to explain how the target driven financial services industry functions in the UK, it might not function in the same way in Spain, hence my initial questions.


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## chris(madrid) (Mar 23, 2008)

crookesey said:


> Sorry if I sound like a 'know it all', but I do know quite a lot about the industry that I have been involved in for the past 25 years, as I should.


Been there too - and I got out - I've been surrounded by bankers all my life though. 

Banks RIGHT NOW want secure investments - That's what they're telling me - I asked last week when I went to rough my branch up a bit. Many are still too exposed on sub-prime (and whatever you want to call it here) and need CAPITAL. I dont think I've seen banks THIS cautious about lending money since 1979 (when I started). An extension on an existing mortgage (I'd assume) is risk assesed differently too. But the expat/expat sale thing (certainly here nr Madrid) is a real show stopper. Certainly it is if you're non-European. They've had folk do a runner on them and they're NOT prepared to accept the risk.

One has even told me they wont offer mortgages unless you can PROVE you dont need it and it's only for tax reduction. But show interest in an investment account - and you're totally flavour of the month. They're especially keen to get dollar investment accounts btw. They're being performance assesed on how many Private (500,000plus) and Personal level investment accounts(200-250,000) they can get - almost no plus points for loans (inc housing). They're fighting for town hall accounts - & I mean fighting.

Yup you're right they want to snag new accounts too - But they want ones that they can reap off for YEARS AND YEARS to come as you've also said. That said I've noted a drop in trawling for student accounts here recently - why? - well I dont honestly know for certain - but many simply cant find jobs once they graduate.


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## crookesey (May 22, 2008)

chris(madrid) said:


> Been there too - and I got out - I've been surrounded by bankers all my life though.
> 
> Banks RIGHT NOW want secure investments - That's what they're telling me - I asked last week whn I went to rough my branch up a bit. Many are still too exposed on sub-prime (and whatever you want to call it here) and need CAPITAL. I dont think I've seen banks THIS cautious about lending money since 1979 (when I started). An extension on an existing mortgage I'd assume is risk assesed differently too. But the expat/expat sale thing (certainly here nr Madrid) is a real show stopper. Certainly it is if you're non-European. They've had folk do a runner on them and they're NOT prepared to accept the risk.
> 
> ...


The only time that I ever go into my bank is to pay in cheques, I use the Co-Op Bank, situated close to the Town Hall, DWP, Home Office (branch) and hardly ever have to queue. 

However I now have to look after my mothers affairs and recently visited three of her four banks (don't ask why four? I haven't a clue). Lloyds TSB looked like a dole office with a constant supply of chavs,chavettes and immigrants. Santander had a better class of client but the in house Costa Coffee was larger than the banking section, and the banking queue was never ending. Yorkshire Bank actually looked like a bank and had a member of staff who knew what she was talking about.

As I left Lloyds I noticed another Lloyds branch about 300 yards away, why? A branch of GAP has recently closed and is to be replaced by a bank, I work in offices above a bank and can see seven bank branches from my window. What is the UK's facination with visiting Bank branches? I notice that in Spain Bank branches are not as thick on the ground and generally are not full of degenerates queueing for god knows what.

This is costing the UK banks billions of pounds and why? I conduct most of my business by touch tone telephone and the occasional phone call. These are the guys that started the sub prime fiasco and they now want more and more branch offices. Perhaps they are emulating the ever expanding useless public sector.

Just to pander to your pessimism, I will make two predictions. We will see another major US bank go belly up and there will be yet another run on a UK bank, after all Santander can't buy all our failing banks and the US banking system deserves all it gets.


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## chris(madrid) (Mar 23, 2008)

crookesey said:


> I notice that in Spain Bank branches are not as thick on the ground and generally are not full of degenerates queueing for god knows what.
> 
> Just to pander to your pessimism, I will make two predictions. We will see another major US bank go belly up and there will be yet another run on a UK bank, after all Santander can't buy all our failing banks and the US banking system deserves all it gets.


I can only really go by where I live BANK POPULATION wise - but we've most banks in our village. Most of the Major Cajas too. 

On the whole emptyish when I go in (generally to pay in cheques or <ahem> pay fines) - but I tend to go at first light. They often let me in before they actually open to the public when any self respecting Spaniard is still (as my wife like to point out, being Spanish) in bed - sometimes get a free coffee & churros out of it too (see why i like to go!). 

You'll find (I do anyway) there are things here it's better to do IN the branch as getting the receipt stamped gets round a **** load of hassle with town halls etc. For a whole series of reasons we do not pay our municipal taxes by direct debit or transfer. We go in and get the receipts stamped.

As for Bank predictions. Yup I expect to see more US banks go plop - esp those without international status. Runs - that too. I'm not sure Santander wants any more tbh - but you never know. I must ask my contacts.


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## Davidakky (Oct 14, 2008)

*Obtaining s Spanish Mortgages*

Dear Mark,

Current up to date UK income can be used by Spanish lenders to purchase a Spanish property. These documents need to be up to date and show current incomes.
If you have left your jobs and moved to Spain already then you will not have current income and as such Spanish lenders will decline your application as no current income to pay the debt.
There is no 'self certification' or 'non-status' mortgage to speak of and the loan to value is very low and very expensive for those available.
Spanish mortgage work on the Loan to Value (LTV) or Loan to Purchase Contract (LPC) calculations. Some banks will lend up to 80% LTV but the maximum will be the value of the purchase contract. Many more lenders are calculating their borrowing purely again the LPC or lower depending on the valuation.
This mean you need to have a minimum of 20% of the purchase price (dependent on valuation) just to complete plus 10% to cover fees taxes and charges if paying cash. 
If you are obtaining a mortgage then these fees will go up to 12.5% to cover mortgage stamp duty (1% of the mortgage value + 1% of the total accrued interest), 1% bank set up fee based on mortgage value, usually 1% broker fee if you use a broker plus Notary and registration fees.


Kind regards,
David Atkinson


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## markjd (Aug 1, 2008)

Hi David, Thanks for the info, the forums can get confusing at times i had lots telling me that the NIE and residence i had got in 5hrs wasn't and there were lots of tales of woe on the site, did put me off a bit but must have got lucky i guess.

Is the 12.5% exact or about figure as i got books from people like blevins and found some information inaccurate not that they bothered to call when i sent them some information.
We are well inland and we are not in a position to spend lots at the moment as have money tied up in business, we have about £40,000 to put against a property that includes covering fee's, but when you think you can get a 3 bed villa with a ensuite bathroom on one with 6000sq metres of land and fruit trees for £107,000, you can get a fully completed town house up to 6 bedrooms for €92,000 so we are not going to be having a big mortgage at this stage.
Can you recommend any banks?
can you also reccomend financial advisor, the Spanish are telling me i can't do payroll for my own company to pay my taxes and social security.

Kind Regards

Mark


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## Davidakky (Oct 14, 2008)

The 12.5% is a good approximation for ALL fees, taxes and charges.
It covers the main purchasing costs:
•	7% IVA (VAT) 
•	1% Legal fees
•	1% Stamp duty
•	Notary & registration fees
The mortgage costs:
•	1% bank opening fee
•	1% broker fee
•	1% stamp duty (1% of mortgage value + 1% total accrued interest over the full term)
•	Notary & registration
There is a great deal of complications when buying a country property, mainly the fact that the property isn't registered correctly whereas a town house or urban property is generally a lot easier.
Borrowing is reduced on rustic property and 70% of the purchase price is a luxury and hard to obtain. Borrowing on urban property is much easier as there are less inherent risks involved.

I can recommend Bill Hamilton to discuss your income/tax/payroll issues. He has been here for 20 years and I recommend anyone who needs this kind of information to him as he knows the Spanish system inside out.
0034 952441632 or [email protected]

If you want specific information regarding banks and lenders please contact me directly using the details below.
Kind regards, 
David Atkinson 
Tel & fax: 0034 952 380 019 
Mobile: 0034 653 118 245 
UK: 0208 144 9344
[email protected]


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## Davidakky (Oct 14, 2008)

The only UP FRONT fee the bank will ask for is the valuation fee and this is based on the purchase price!
DO NOT pay anyone an up front fee!! Regardless of the reasons!!
The valuation fee is sometimes required from teh mortgage broker and this is generally 0.1% of the purcahse price + IVA at 16% although there are tiers to the valuation fee structure which change with each valuation company.
The above calculation is about right! Anything more than €100 over this and ask to pay the bank directly!!


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