Over half of those buying property in Tenerife do so with a Spanish Mortgage. Since the credit crisis this has become far more difficult as the banks have reigned in there lending criteria. The whole process takes much longer and clients who would have easily qualified for a mortgage as little as 12 months ago may now end up with no Spanish mortgage at all.
The biggest danger to come from all this is to those who must have a Spanish Mortgage to compete their purchase. All too often, reservations are paid and deposits are put down before the mortgage has been confirmed or arranged. If a buyer is subsequently turned down for a mortgage, what happens to their deposit? In most cases it is simply gone. A situation we find completely wrong and easily avoidable.
Who receives this money? Why can the buyer not have it back? It is surely not their fault they cannot get a mortgage. So whose fault is it? The banks? The estate agents?
What really matters is had the correct procedures been followed no money would not have been lost in the first place. There is a very simple and effective solution to this problem. The purchase agreement/contract must contain a clause stating that should the bank fail to offer a mortgage of sufficient size or should the bank subsequently cancel the mortgage offer, the buyer receives there deposit and reservation back in full – no questions asked.
There is no reason in the world for this not to happen other than perhaps some less than honest estate agents wish to earn commission whether the sale goes through or not. So when buying with a Spanish mortgage, insist on these terms, don´t take no for an answer, don´t accept any excuses and make sure your independent lawyer can confirm to you that this added to any contracts you sign before you hand over any money.