Below Market Value in Spain?

[Contracts4Trade]

Originally Posted by Lindsey

How does BMV work with the Spanish market? Would LTV be based on current valuation or purchase price?

Lindsey, at present Spanish banks are basing LTV on the selling price and not the bank valuation. It is their way of ensuring they do not fund the buyers by more than 70%-80%.

The banks are insisting on seeing evidence of a deposit before offering to lend.

[Lindsey]

Hi Keith,

Many thanks, I thought that would be the case.

If you put in say a 20% deposit from your own funds, and funded the 80% via mortgage, would you then be able to remortgage to 80% of the bank valuation, and if so what sort of timescales would you be looking at before this could be done?

Thanks

Lindsey

[michaelbush]

Originally Posted by Lindsey

Hi Keith,
Many thanks, I thought that would be the case.
If you put in say a 20% deposit from your own funds, and funded the 80% via mortgage, would you then be able to remortgage to 80% of the bank valuation, and if so what sort of timescales would you be looking at before this could be done?
Thanks
Lindsey

HI Lindsey, We have some really good opportunities BMV on our site, for Spain, where you can enter for as little as 5,000-10,000 euros, and get that returned once the mortgage is done. Look at the Almeria (Velas Blancas), Denia (Mar de Coral and Mar de Vergel properties). They are all finished and not off plan. In some cases we can offer cash back too!

[Contracts4Trade]

Hi Lindsey,

The remortgage option is looking tough at the moment. Most people expect property prices to fall further over the next 18 months or so.

In effect, the bank valuation for a remortgage in say Autumn 2009 could be up to 20% below values today. Meaning you wouldn´t be able to achieve the same size of loan that you would have existing. Add to that the knowledge that most, if not all banks are considering dropping LTV down to as little as 60% for non-residents and 70% for residents and this could put you in a difficult position if you had to rely on a remortgage later.

[Lindsey]

Are you guys finding prices falling in all areas of Spain or are some areas more badly affected than others?


Thanks

Lindsey

[Lindsey]

Hi Michael,
I will take a look at your site, and I also have a lot of homework to do on Spain ... especially as there seems to be avery split opinion across the WWW on which areas will have growth/rental potential etc! My other concern is that in the current climate I suspect it would be hard to sell on if required.

[Contracts4Trade]

Originally Posted by Lindsey

Hi Michael,
I will take a look at your site, and I also have a lot of homework to do on Spain ... especially as there seems to be avery split opinion across the WWW on which areas will have growth/rental potential etc! My other concern is that in the current climate I suspect it would be hard to sell on if required.

Lindsey - All areas are effected. Some worse than others. The best quality locations are probably the best option. IMHO the market will fall another 20% over the next 2 years. With the exchange rate down by 20% and accounting for the 10% purchase costs in Spain, then you are looking at 50% negative equity during that time.

If you are planning to buy to use and keep for 5 years or more, then you will see an increase in value.

I don´t think there are any short-term property markets anywhere in the world, at least not for the foreseeable future. Only the property millionaires will get any benefit during a property market slump. They can afford to buy at the bottom in large quantity at very low prices, and sit it out.

[Goldberg Global]

Keith you make some good comments. thanks.

Banks are doing things (logically) on the sales price. If you want to buy and remortgage you may find it tough. Other clients I have dealt with recently had properties and they wanted to extract equity. But the banks did not allow it.

If the banks are not lending then the market will not rise very much. There is no money to push it up.