Mortgage Brokers Spain – Know who you’re dealing with!
With the Spanish mortgage procedure often being a drawn out and complex system, many foreigners will turn to an independent mortgage broker to help them. Banks will often not explain all the details of their various options in a language you can understand, so using an independent mortgage broker in Spain is often a wise choice. However, in some cases such as those case studies below, they can be more of a hindrance and can result in the client losing that ´dream home´ he may have spent time and money finding.
Once a mortgage broker has been appointed, his job will be to explain all the options offered by various banks, discuss your financial situation with you in detail, evaluate your requirements given the information he receives, and introduce you to the bank offering the most suitable mortgage for your requirements.
A good broker worth his salt will have in depth knowledge of the local banks, what special deals they are offering at any given time, and use their credibility with lenders to get the best deal for their clients. Spanish banks will have targets to reach, and at some times of the month/year will be more open to negotiation than others. Your broker should be aware of this and time the application correctly in order to obtain any of the ‘specials’ on offer. Brokers are extremely valuable to banks, as they often have difficulty in attracting foreign buyers directly, so various banks are predisposed to making good offers through mortgage brokers that bring them a regular supply of clients.
Once a suitable bank and mortgage option is agreed, it is then the mortgage brokers job to collect the documentation required from the purchaser – i.e. proof of income, wage slips, P60 or your accounts if self employed, and present them to the chosen bank who will arrange a valuation of the property. Your mortgage broker in Spain will act as the go between, liaising regularly with the purchaser and the bank – who will often need chasing up.
However, as with any other transaction you make involving other people, you must be aware that there are some brokers who will not act in your best interest. Their fee is commission based, usually 1% of the value of the mortgage, payable by the bank on completion of the mortgage. Once they have introduced your name as their client, they get paid regardless, therefore their incentive to follow through in your best interest is negotiable.
Case Study – Mortgage brokers in Spain
Often clients are wary of estate agents offering mortgage services, believing they will be forced to go with the ‘preferred’ bank of the agent. The three examples below are clients of ours who preferred to use the services of an independent mortgage broker based in Calpe:
Client 1. Bought a resale property in Gran Alicant and required quite a high mortgage. The mortgage broker met him, and took his paperwork to the bank and 3 months later the client has made two further trips to Spain but still has not completed or been kept informed of the reason for the hold up in the procedure. His main complaint is that many times he is unable to get the mortgage broker on the phone, often for weeks at a time, and cannot get any answers as to why this straightforward transaction is taking so long. After intervention by ourselves, it appears that the reason for this hold up is that the bank were not presented with the correct paperwork intially.
It is the mortgage advisors job to follow this up both with the client and the bank to completion. Had he kept in contact with the bank and the client, this delay would not have occurred.
Client 2. Bought a resale property in Benissa which required a 50% mortgage. He too handed over his paperwork and sat back and waited. Numerous unanswered phone calls later, he attempts to negotiate directly with the bank himself. Fortunately, this client is a mortgage broker in the UK, and was able to arrange his own mortgage. Without his own invention, he would probably still be waiting.
The mortgage advisor got paid anyway, as he had initially introduced the client to the bank – despite the fact that he did nothing more than meet once with the client and make one trip to the bank.
Client 3. In this case, the client was taking over an existing mortgage belonging to the vendor, and required just a small top up – virtually worthless to the broker earning 1%. Paperwork was collected – Esritura, Valuation (which in this case had been done on the property very recently so was still valid for use at the time of purchase), wage slips etc. Two months and many unanswered phone calls later, the client who already lived in Spain, made a trip to the bank to find out what was causing the delay. The bank had never heard of her – no application had been made. During the last phone conversation she had with the broker (in which she had to use a friends mobile to get him to answer), he had advised her that an offer had been made and the figures faxed through to his home office – what a load of ***************
In this case, its simply a matter of money. Knowing that he would make very little, the broker should have clearly stated in the beginning that he did not want to deal with the client. He could have told her he was too busy, going on holiday – anything other than string her along for two months with no intention of actually working on her behalf.
Conclusion:
When using an independent mortgage broker in Spain, ask for written testimonials from previous clients, references or even telephone numbers for people he has acted for – never act on face value as often this can be deceptive. Always get the name and address of the bank he/she is using, and a contact person – just in case you have to follow up yourself.
A good mortgage broker can be worth his weight in gold, but a bad one will have you doing all the work yourself whilst he sits back and reaps the rewards. For those wary of using the estate agents as ‘brokers’ - think twice - the agent has a lot to lose should a purchase not go through. It is in their best interest to get you a good mortgage offer, as their commissions are made on the sale of the house. No sale – no commission.
