September 2022.
Buenas tardes,
I currently live and work in the UK and have a free-of-charge property in
Andalusia.
My query is related to the equivalent of the “equity release” here with the system
in Spain.
According to what I have read on your website and other sources, it does not exist
as is.
A year ago, I tried to mortgage my house in Andalusia to obtain liquidity and I
bought a house here, without having to sell it.
Only Bankinter raised such a possibility for me, but they rejected me after sending
them all the lengthy dossier they asked me for. They did not give me an explanation
for the refusal, only that it had been rejected. After researching on the internet,
I learned of a recent legislative change that gave priority to the client when
choosing the currency in which the mortgage loan can be repaid, even changing it
during the life of the loan, and unilaterally by the client. This has achieved the
opposite effect to that sought in said legal reform, that is, now NO bank will give
you a mortgage if your income is not in Euros, mine is in Pounds.
All the banks that I contacted dismissed me from the beginning when they were aware
of having income in a currency other than the Euro, probably due to said legal
change that makes them unprotected against sudden changes in the currency exchange.
From the foregoing, it can be deduced that a bank risks giving a mortgage to a person
who meets certain income parameters and payment capacity with a certain level of
risk, as soon as said client loses his job, for example.
However, my case was to request a mortgage for half the appraisal value of my home
in Andalusia, to be able to buy a house here and not spend my money on rent
here.
Over time, the risk of non-payment for the bank would be INFINITELY lower in my
case, because not only would they have a home with a value much higher than the debt
contracted, but my financial situation here would also be healthier by having a home
in a property that I could sell before losing my home there or equity release my
home here. But for a greater guarantee of payment, since that home is not the main
home, you could also rent it and help pay said half-mortgage. In short, seeing it
from a purely financial point of view, it is nonsense that it is impossible for me
to mortgage my home there with so little risk for any bank. Someone should have
identified a market niche in people who are in a situation like mine.
Dismissed this possibility I would like to know another possible option if there is
any. This is my particular situation.
Spanish/British dual nationality. Living and working in the UK.
Housing in Andalusia. Valued by Tinsa at 113k euros in 2019. I am the sole owner of
the property which does not have any charges. It is not rented and is used as a
second residence for vacations when I visit Spain.
I am 53 years old. Permanent job in the UK.
I think that in the past the financial companies in the United Kingdom did the
“equity release” of properties in Spain, but after the financial crisis and the
collapse of the local real estate market, they stopped doing these operations.
My contact details are as follows:
Luis.
Hello Luis, Thanks for the enquiry regarding Equity Release in Spain. You absolutely nailed it in every way; you are 100% correct in so many ways.
Let me reply below;
Currently, I live and work in the UK and have a free-of-charge property in Andalusia.
Are you a Spanish citizen? Already the banks are getting anxious if you are not.
According to what I have read on your website and other sources, Equity release does not exist as is in Spain.
Hard to believe, but correct.
I tried to mortgage my house in Andalusia to obtain liquidity.
I can see where this is heading.
Only Bankinter raised such a possibility for me…. they rejected me after sending them all the lengthy dossier which they asked me for.
We had the same experience with our clients a few years ago, that is why this business was created.
They did not give me an explanation for the refusal, only that it had been rejected.
They base it on your INCOME and ability to repay.
After the financial crisis
in 2010, they are afraid of ending up with hundreds of millions of euros in
property owned by foreigners.
I learned of a recent legislative change that gave priority to the client when choosing the currency in which the mortgage loan can be repaid, even changing it during the life of the loan
Actually, BankInter explained this to me at a meeting. They are helpful, but their hands are tied.
This has achieved the opposite effect.
This new law however isn’t really the problem, but in fact, it caused another problem for the property sector. That conversation is for another day.
All the banks in Spain that I contacted about Equity Release dismissed me from the beginning when they were aware of having income in a currency other than the Euro.
Exactly, the same problem all our equity release clients were having, but for a combination of reasons, not just the currency one.
Over time, the risk of non-payment for the bank would be INFINITELY lower in my case, We can see this, but they cannot! And this is why we set up our Equity Release division.
In short, seeing it from a purely financial point of view, it is nonsense that it is impossible for me to mortgage my home there with so little risk for any bank.
We are bringing in investors who can see what the banking sector in Spain just cannot.
Someone should have identified a market niche in people who are in a situation like mine.
We have!!!
I would like to know another possible option if there is any.
Ok, we can help.
Spanish/British dual nationality. Living and working in the UK.
Our investors simple “loan” on the value of your property and really they don’t care where you are based. There is no repayment to be made so they don’t mind what currency you earn.
I am 53 years old.
Now, here is a problem. Investors like clients well into their 70s. You can’t be blamed for being so young, but would you consider a 10-year deal? You get Equity release now, and you have, for example, ten years to enjoy the property before ownership passes to the investment fund. This is something we can get for you in the blink of an eye.
I think that in the past the financial companies in the United Kingdom did the “equity release” of properties in Spain, but after the financial crisis and the collapse of the Spanish real estate market, they stopped doing these operations.
Now, here is a problem. Investors like clients well into their 70s. You can’t be blamed for being so young, but would you consider a 10-year deal? You get Equity release now, and you have, for example, ten years to enjoy the property before ownership passes to the investment fund. This is something we can get for you in the blink of an eye.
I think that in the past the financial companies in the United Kingdom did the “equity release” of properties in Spain, but after the financial crisis and the collapse of the Spanish real estate market, they stopped doing these operations.
Yes, they didn’t quite understand the system in Spain and I knew of one huge investment firm based in Gibraltar that lost tens of millions. We actually spoke to them when we were setting up, they needed a division like ours to protect them from insolvency and a dropping property market but before they knew it, it was 2010 and the time was up.
Well, Luis, we are the only English-speaking Equity Release company operating all across Spain.
We’d love to help so please send us some specific details on your property and your thoughts on the timed-usufruct model as mentioned above. We can also explore sales and lease back and many more ideas.
We look forward to helping you. Dee will take it from here.
Kind wishes,
Ian
