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Small Mortgage Required

Small Mortgage Required

Old Jun 6th 2019, 2:52 pm
  #1  
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Default Small Mortgage Required

Hello

My wife and I are looking to buy a place in Spain and have found one we like, however, for a year, we need a small £50k mortgage. Only for a year as we can pay it off next year. Whilst in Spain recently, we visited Sabodell bank and they gave us a quote.

Would you say it is the best way to do it or would you recommend trying to get a small mortgage in the UK, is that even possible when buying abroad?

Value of property is 190k Euros.

Anyone done it this way before?

Thanks

Paul
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Old Jun 6th 2019, 4:41 pm
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Default Re: Small Mortgage Required

I would say that as traditional mortgages are not geared for short term loans then this is going to be a very expensive option for a one year loan with high setup and redemption costs including notary etc.
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Old Jun 6th 2019, 5:10 pm
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Default Re: Small Mortgage Required

You will not be able to raise a mortgage in the UK but might be able to raise a loan, if you have equity?
As spainrico suggested, a loan might be a better option, if you can negotiate one.
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Old Jun 6th 2019, 5:26 pm
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Default Re: Small Mortgage Required

Originally Posted by paulwilko10 View Post
….. or would you recommend trying to get a small mortgage in the UK, is that even possible when buying abroad? ...
If you have property in the UK you might be able to get a loan (mortgage) secured on that, but a bank/ lender in the UK is extremely unlikely to have procedures in place to complete the legal documentation required to register a lien/ mortgage on a property located in Spain, so that (loan in the UK secured on a property in Spain) isn't really an option for you,

Last edited by Pulaski; Jun 6th 2019 at 7:12 pm.
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Old Jun 6th 2019, 6:32 pm
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Default Re: Small Mortgage Required

A short term mortgage will work out very expensive as there will be significant charges up front as the government applies a tax of something like 6% of the amount borrowed and when you pay it off at the end of the term there are another load of fees etc to pay.

Over 25 year period it’s not a big deal, but over one year it is very significant.
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Old Jun 6th 2019, 6:34 pm
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Default Re: Small Mortgage Required

I did it the way you propose all be it 11 years ago and for 2 1/2 years. It worked but there are things to consider. Firstly you will probably have to take out a 10 or 15 year mortgage you may get less but I did 10 and paid it up early. It's not like in the UK though once your mortgage is paid off you then have to go through a notary to have bank or mortgage lender removed from the escrutiria, you have to pay for that anything from 800 to 1200 Euros. Also when I paid mine off I was advised to do it in such a way as follows, pay off an amount but leave say 2 payments then let it simply end naturally after those 2 payments. That saves you money as there is a % charge for over payments but an even larger % if you pay it all off early. Finally to get a mortgage you will need Spanish life insurance which is more expensive than in the UK but also much more expensive for men. All factors to consider if you can get a UK loan my guess is that would in hindsight be easier and save you money.
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Old Jun 7th 2019, 8:31 am
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Default Re: Small Mortgage Required

Think of the exchange rate. Get the mortgage in the currency that you are buying in, recently sterling has consistently devalued against the Euro and with current political confusion will probably continue to do so. In the last year or so a €50K loan in sterling would have been about 40K now it is probably closer to 44K
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Old Jun 7th 2019, 8:48 am
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Default Re: Small Mortgage Required

Thank you everyone, very helpful.

We have been quoted a 1% fee when paying it off, so £500 / Euros

Personally i don't want to do either loan or mortgage but we have seen a place we like and these are the only options should we go for it.

The leaving 2 payments trick seems a good idea :-)

I will look into loans against our property aswell

Thanks all but keep any advice coming if you have anymore ;-)

Paul
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Old Jun 7th 2019, 9:12 am
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Default Re: Small Mortgage Required

Originally Posted by paulwilko10 View Post
Thank you everyone, very helpful.

We have been quoted a 1% fee when paying it off, so £500 / Euros

Personally i don't want to do either loan or mortgage but we have seen a place we like and these are the only options should we go for it.

The leaving 2 payments trick seems a good idea :-)

I will look into loans against our property aswell

Thanks all but keep any advice coming if you have anymore ;-)

Paul
As far as I know is that you can pay off any variable rate mortgage without fees and only when it's fixed you have to pay? Otherwise the easiest option is a home improvement loan for your home in the UK but rates will probably be higher.
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Old Jun 7th 2019, 9:18 am
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Default Re: Small Mortgage Required

Originally Posted by Moses2013 View Post
As far as I know is that you can pay off any variable rate mortgage without fees and only when it's fixed you have to pay? Otherwise the easiest option is a home improvement loan for your home in the UK but rates will probably be higher.
Just got a quote, yes they are higher but i think it will be easier, in fact i have been pre approved just now lol
No early repayment fee either
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Old Jun 7th 2019, 9:29 am
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Default Re: Small Mortgage Required

Originally Posted by paulwilko10 View Post
Just got a quote, yes they are higher but i think it will be easier, in fact i have been pre approved just now lol
No early repayment fee either
Very good
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Old Jun 7th 2019, 12:19 pm
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Default Re: Small Mortgage Required

When I bought my first house in the UK, I was young with a low income and no money for a deposit. Told the bank manager that the house was in need of repairs before I could move in and used that cash for the deposit. He was not a fool and I am pretty sure he new exactly what I was up to, but I guess he thought I was a good risk.

That was back in the day when you got to speak to someone who had the authority to make a decision :-) you did not rely on the bank of mum and dad :-(
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Old Jun 7th 2019, 12:51 pm
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Default Re: Small Mortgage Required

Originally Posted by missile View Post
When I bought my first house in the UK, I was young with a low income and no money for a deposit. Told the bank manager that the house was in need of repairs before I could move in and used that cash for the deposit. He was not a fool and I am pretty sure he new exactly what I was up to, but I guess he thought I was a good risk.

That was back in the day when you got to speak to someone who had the authority to make a decision :-) you did not rely on the bank of mum and dad :-(
Not really sure about the relevance to my original question?
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Old Jun 7th 2019, 2:08 pm
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Default Re: Small Mortgage Required

Originally Posted by paulwilko10 View Post
Not really sure about the relevance to my original question?
It's good to talk
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Old Jun 8th 2019, 7:29 am
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Smile Re: Small Mortgage Required

Originally Posted by paulwilko10 View Post
Hello

My wife and I are looking to buy a place in Spain and have found one we like, however, for a year, we need a small £50k mortgage. Only for a year as we can pay it off next year. Whilst in Spain recently, we visited Sabodell bank and they gave us a quote.

Would you say it is the best way to do it or would you recommend trying to get a small mortgage in the UK, is that even possible when buying abroad?

Value of property is 190k Euros.

Anyone done it this way before?

Thanks

Paul
Hi Paul,

We did the same thing and asked our bank in the UK for a short term loan. If you have a good track record with them and have been a regular customer for some years you should at least ask. Good luck.
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