Saving an Incomplete Property Purchase
You’d have to feel sorry for those servicing the UK market in overseas property sales. Brexit had gummed up the works for several years. Once it was put to bed a deluge of property purchases in overseas locations was forecast. Nowhere moreso than Spain, a perennial holiday and retirement favourite of the British public. As 2020 began signs were good, interest and sales were definitely on an upward curve. Then the dastardly COVID-19 pandemic hit and all that evaporated like morning mist in the midday sun.
Agents say that they had a decent level of traffic in late 2019 and early 2020. Many UK buyers were keen to get a purchase sewn up before the currently touted end of the Brexit transition period in December 2020.
Quite a few of these potential buyers had committed to a deal and had paid their deposits, then everything ground to an excruciating halt. Estate agents, banks, legal and government offices have been closed for several weeks. The likelihood is that a return to full service will be executed slowly over the coming months. This is not likely to help matters much for those stuck in the limbo of having committed to a property purchase that may not complete for months.
There is one thing that financial meltdowns like the one currently underway have in common. Cash becomes king and people begin to horde it like cackling witches.
In times of worry like this one, people are inclined to spend as little as possible. In most cases (unless you own a food based retail outlet) the amount of income also reduces – sometimes drastically – which makes cash even more valuable. Therefore, the cash people may have set aside for a holiday or retirement home overseas, which seemed like a great idea at the time, may not seem like such a necessary investment now.
You would not be alone in having these grave concerns about personal liquidity over the coming months and years. Spanish mortgage specialists Fluent Finance Abroad says there are options. “Nobody could prepare for this pandemic,” says Founder Marc Elliott de Lama. “Since March 13th, the property market, like most of the economy, has effectively been put on ice. But, once restrictions are lifted, buyers will have to fulfil their purchase contracts or face losing a hefty deposit. Many of our clients are worried if they will have sufficient liquidity to complete – we think a Spanish mortgage could provide the answer.”
De Lama continues: “Whether they’ve signed up to an off-plan deal, a rent-to-buy scheme, or have already placed a non-refundable deposit on a resale property, a Spanish mortgage might help them move forward on the purchase, without using up all their valuable cash reserves. Burning cash unnecessarily is certainly something at the forefront of clients’ minds during this unprecedented pandemic.
De Lama says that short-term, flexible, over-payment mortgages are available in Spain. This means borrowers don’t have to be tied into a long-term arrangement. They can cancel the mortgage at any time, without incurring heavy redemption charges or cancellation fees.
Age is not as much of an issue as you might expect either, as Spanish banks can lend based on pension income.
Taking the opportunity to finance the burden of completion with a Spanish bank may make the difference between securing that overseas property or just losing a sizeable deposit.
Interest rates in Spain are quite reasonable at the moment, coming in at around 2.5%. This is unlikely to move much in the shorter term as the EU shores up its balance sheets after the pandemic.
De Lama says the mortgage debt will be against the property in Spain, so it would not affect creditworthiness or credit scores in your home country, nor would it affect any ability to obtain credit at home.
For further details visit fluentfinanceabroad.com or email info@fluentfinanceabroad.com.
Saving a COVID-19 Induced Incomplete Property Purchase
