Changing Mortgages in Spain
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Changing Mortgages in Spain

Home >> Spanish Mortgages >> Changing Mortgages in Spain

Thursday, 23 Oct 2008

Swapping your Spanish Mortgage Provider

You may find that the developer has already taken out a mortgage loan on the home you wish to buy. In this case, you will have several advantages and will be able to arrange a loan that meets your needs easily and at considerable savings.

This is because you will not need to perform the steps required to actually mortgage the home, but rather simply change the borrower on the loan arranged by the developer for the home you wish to buy. This change in the borrower of a loan is called loan assumption, and it will be executed at the same time as the deed of sale.

When you assume a developer's loan, you avoid all the costs involved in having the home appraised, requesting reports on liens and encumbrances from the Property Registry, executing the new mortgage deed in the presence of a notary and subsequently recording the deed at the Registry. More importantly, you avoid having to pay stamp duty on the new mortgage deed.

This tax varies from one autonomous community to another, but is most commonly equal to 1% of the mortgage liability. In addition to financial savings, by assuming a developer's loan, you will also save time and headaches, as the process is simple, quick and convenient. Should the developer's loan not meet your needs, you can change the amount to be financed, the term, the payment dates, etc., without sacrificing the significant financial savings involved in the assumption

Example of cost savings:

Let's say you were to purchase a home valued at €200,000 for which the developer had already arranged a mortgage loan for €160,000 at Bancaja. If you were to arrange a new mortgage loan, you would need to pay the appraisal company about €260 for the valuation fee and pay an additional €2,400 to €2,800 just for stamp duty, depending on the mortgage liability stipulated by the bank where the new loan is arranged.

In addition to these two charges, you would also need to pay the notary and registry fees involved in closing and recording the new mortgage. Consequently, by assuming the developer's loan, you would save over €3,000.