Bank Caixa Galicia offers Sterling mortgage offer for Mallorca properties

Bank Caixa Galicia has come up with a very useful initiative to help people looking to buy property in Mallorca but are put off by the current weakness in the pound.

This new product will allow many people to get on with searching for a property without worrying about the exchange rate. A great advantage of this is that it means they can take advantage of the competitive prices we are seeing in the market at the current time.

The bank will offer a mortgage based on a total credit limit of 70% of the property valuation (subject to the usual risk assessment). With current sale prices being low and, in many instances, less than 70% of the bank valuation, it offers the purchaser the opportunity to have 100% of the Euro purchase price paid by the bank. A deposit (approximately 30% down payment) is still required in order that the total loan does not exceed the 70% allowed by the bank. This is held in Sterling until the rate improves and the purchaser is happy to exchange it into Euros. In such cases the only money that need be exchanged at the outset is the associated purchase costs (taxes and legal costs amounting to about 10% of the purchase price).

When the rate has improved the purchaser can then exchange the Sterling deposit into Euro. However they will not require the full amount as the purchase price was less than the valuation. In this case the bank will require the purchaser to amortize (pay off) 20% of the amount loaned, thereby maintaining a total loan ratio of 80% of the purchase price (or 70% of the valuation, whichever is the lower). The remainder of the Sterling deposit is returned to the purchaser.

It is more simple than it might sound! If you would like to find out more and have an illustration based on the amount you are budgeting for a property, please email me at kevin@mppsearch.com.