WITH Brexit just a week away, the mood among British house hunters in Spain is highly uncertain.
After UK Prime Minister Boris Johnson finally secured a withdrawal agreement for Britain to leave the EU, the pound surged above €1.16.
However the optimism was not to last and the value subsequently dwindled due to fears of Johnson not being able to get the necessary support in the House of Commons.
In response to such a volatile climate, Spanish banks have been MODIFYING THEIR CONDITIONS IN ORDER TO MITIGATE RISK.
Coupled with this Brexit uncertainty is Spain’s new mortgage law, both of which have seen banks revert to more risk-averse lending patterns.
Established this summer, the Government’s Article 20 of the Real Estate Credit Act (Ley de Credito Inmobiliario) makes it more difficult for expats seeking a mortgage if they are not in the eurozone, SPECIFALLY, IF THEY DERIVE THEIR INCOMES IN A CURRENCY OTHER THAN THE EURO. THIS IS BECAUSE THE BORROWER HAS THE RIGHT TO CONVERT THE MORTGAGE INTO THEIR OWN CURRENCY, UNDER CERTAIN CIRCUMSTANCES, AT A LATER DATE, WHICH COULD LEAD TO LOSSES BY THE BANK.
SO, SOME BANKS ARE ONLY LENDING TO EURO EARNERS AND OTHERS ARE REDUCING THEIR LOAN-TO-VALUES FOR BRITISH CLIENTS IN PARTICULAR. AS ALWAYS, DIFFERENT BANKS INTERPRET THE LAWS IN DIFFERENT WAYS SO THEIR LENDING POLICIES CAN DIVERGE CONSIDERABLY. OBVIOUSLY, AS A BROKER, WE HAVE TO KNOW WHAT EACH BANK IS WILLING TO DO AND ARE ABLE TO GUIDE OUR CLIENTS INTO THE RIGHT PRODUCT ACCORDING TO THEIR REQUIREMENTS AND PERSONAL CIRCUMSTANCES.