Pssst! Looking For Cheap Spanish Property?

Look no further. We had noticed early on this year how Spanish banks had offloaded large stocks of properties from their books and funnelled them to existing or newly incorporated real estate divisions under their control, much like SIV’s. This had turned Spanish banks de facto into the largest real estate agencies. What we had also noticed, based on the failed conveyance procedures our clients had endured this year due to them being unable to secure finance, was that banks seemed to offer significantly more competitive lending terms on those properties owned by them!

This weekend I’ve read for the first time in the financial press that banks are actually offering incredible financial terms on those properties held by them:

1. 100% Loan to Value for residents (yes, you read it right, not a typo)
2. Euribor plus a spread of only 50 basic points (or 0,50)
3. Timeline? Take your pick. 40, 30, 25 years; anything goes.
4. Interest-only? Not a problem Sir. Will it be 1, 2 or 3 years?
5. Grace period? How would you like it, Sir? 1, 2 or 3 years?
6. Opening commission? Early redemption commissions? It’s commission-free, Sir (!)
7. Discounts available of up to 30 and 40% off from the market’s peak in 2007. Prestigious valuers’ appraisals ready-at-hand to prove the fall in price. Take your pick.

So where’s the catch? There’s none. There’s no small writing to be gleaned. It’s a straightforward deal. Banks will make money in two manners, both on the sale and on granting a mortgage loan on the property.

Reading through the spreadsheet just left you gobsmacked. It was as if we had stepped back in time using HG Well’s time machine to the good old days of …2006. How could you possibly miss on the opportunity of buying a property through them with all the above lending terms bearing in mind the Euribor Rate is at an all-time low? Touchée, that’s exactly the point to be made.

How can developers or Estate Agencies compete against this? They cannot, it’s that simple. Banks have become the fiercest competitors in the Property Market taking no prisoners in their wake. If you request a mortgage loan on any property other than the bank’s, they will only offer you 50/70% LTV (non-residents), Euribor Rate plus a spread ranging from 0,7-1,50%, opening commissions (usually 1%), early redemption commissions, no interest-only, no grace period, no…well, you get the drift.  This is clearly a competitive advantage that, unless you are a fellow bank, you cannot hope to overcome.  

If this is not a buyer’s market, then frankly, I don’t know what is.

Related articles

Buying Resale Property in Spain – 21st February 2013
Buying Off-Plan Property in Spain – 8th of June 2013
Investor Guide to Spain’s Golden Visa Law – 8th November 2013
How to Buy Commercial Property in Spain – 4th July 2014
How to Buy Rural Property in Spain – 8th August 2014
How to Buy Property in Spain Safely – 10th October 2014
La Complementaria or ‘Bargain Hunter Tax’ – 8th May 2015
House Hunting in Spain – The New York Times. June 2015
Taxes on Buying Spanish Property – 8th July 2015
Resurgent Spain: Málaga Sees Strong Sales – Mansion Global (The Wall Street Journal). December 2015

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