Summary.
It is not easy getting a mortgage in Spain, but it is possible provided that you can convince the bank that you are a safe bet.
In general Spanish banks will give no more than 60% or 70% mortgages.
As a basic rule, if your bank in your home country won't give you a mortgage then a Spanish bank won't either.
The banks
Banks in Spain are no different to banks in the rest of Europe.
There are 2 basic rules that they apply.
1. You have to have security.
2. You have to show that you can make the repayments.
Where should I get apply for a mortgage?
Ideally you should apply for a mortgage in the country where you can prove your security and your income which is usually where you also pay tax.
If you are intending to move lock, stock and barrel to La Palma with no income or property in your (old) home country then obviously you will need to apply to a bank in Spain.
If you have security (property) in your home country and income in your home country then the best option is to ask a bank there. It will be a lot easier to convince them that you are a safe bet than it would be to convince a Spanish bank. Your 'foreign' pension or benefits may not carry much weight in Spain.
In other cases it will depend on which is easiest to prove.
Security using a property on La Palma.
If you apply for a mortgage in Spain with a property in Spain as security the banks will base their offer on the valuation of an official valuer which a Spanish bank will usually arrange. This valuation is often lower than the market value.
Special care has to be taken with older properties. Roughly speaking, the Spanish banks require that a property has been registered with the Land Registry for at least 2 years. Older properties may not be registered in the correct way, especially if they have not changed hands in the last 10 years. Whilst the ownership may not be in doubt the banks are super careful and will insist on waiting for 2 years after a first inscription before considering a mortgage.
Income requirements.
As with all banks you will need to prove to a Spanish bank that you have a regular source of income in the future. They will base their judgement on your financial history and prospects of continuity.
Euro-based pensions are usually acceptable. Non-euro based pensions may be valued lower to allow for currency fluctuations.
Usually the bank will ask for tax and bank statements for the previous 2 financial years. They will also ask for proof of continuity, so if your income will change or stop because of your move to La Palma your mortgage application may not be accepted.
If you are 'starting again' on La Palma with a new business or a new job it is unlikely that a bank will accept a mortgage application in the first 3 years. This is because you have no proof of continuity of income and no banking history with them. If you are not self-employed then only a permanent salary with a long term contract will suffice. Self-employed people have to show 2 successful financial years with adequate income and profits to be entertained as potential applicants.
Bear in mind that the banks know that many people who dream of an easy life on La Palma leave within a few years. You have to prove that you are not one of them.
Tell the estate agent.
It is very important that you tell the estate if you will need a mortgage before you start looking at houses. The bank rules may prevent you getting a mortgage on a specific house, or other requirements may rule out a mortgage in the first few years. Please tell us before we spend time and effort looking for suitable houses and arranging visits to houses. We need to check suitability for mortgage purposes.
It can lead to disappointment on your side and irritation with sellers and estate agents if you do not.
How can LivingOnLaPalma help.
We cannot change the bank rules and regulations.
We can help you to prepare the presentation of your application to a bank, find a bank which may accept your application and be there when you talk to the bank to explain your situation.
Monday, 21 September 2009
Forest fires on La Palma in August 2009
The news stories.
La Palma was in the news in August 2009 due to forest fires on the southern tip of the island.
Many of the news reports of the extent of the damage were greatly exacurated, many were wildly inaccurate.
The press reported 4000 people evacuated from the island, hundreds of houses destroyed, most of the forests destroyed, they said that the observatory was threatened and the island was consumed by flames. There were even reports of mass evacuations by boat.
The damage
In fact the fires only burned in the very southern part of the island and damaged less than 2% of the pine forests on the island. Somewhere between 500 and 1000 people left their homes temporarily and returned the following day. No one had to leave the island. Only 30 houses were damaged, plus some outbuildings. No people died or were injured but a few dozen domestic animals were killed, some grape vines and lots of weeds were burnt. Nobody was evacuated from the island.
A handful of tourists missed their flights and one hotel had a smokey 24 hours.
For the people directly affected it was a disaster and very frightening, but for the majority of the island it was business as usual.
See www.islalapalma.com/en/forestfires.html for more details.
The pine forests
People talk about the forests being destroyed but that is not accurate. The grass, shrubs and pine needles on the ground burn, as do the dead pine needles hanging on the trees. The trees themselves get scorched but not burnt. The grass recovers after the next rain, the shrubs may take a few years to recover but due to their deep roots the pine trees start to sprout green shoots within weeks and recover substantially after the first winter.
The danger period?
Forest fires can occur in July and August when the vegetation is dried out and the weather is hot. A major fire occurs about once every 5 years, almost always they are high up in the pine forests on the hills up above the villages. Usually no houses are affected.
Fire protection services.
The forest fire protection services are active all year round cleaning up the forests and improving installations. From mid-june to mid-october their numbers are increased dramatically. In the north of the island large networks of high pressure water pipes have been laid and fire-breaks have been made. This helps to contain the fires and allow the fire services to bring them inder control quickly.
Preventative action
House owners take simple precautions to prevent their houses being damaged.
There are 2 dangers, one is fire creeping along the ground, the other is sparks blown by the wind.
The main precautions are:
- make concrete and gravel areas directly around the house, make a fire proof border of about 2 to 5 metres,
- make sure the house has no exposed wood,
- plant a garden with flowers, cactus and shrubs around the house,
- clear all grass and wild shrubs within 20 metres of the buildings,
- don't leave piles of wood near the house,
- when you are not there (in july and august) put all burnable objects (plastic garden furniture!) in a protected area away from the house, inside the house or in a shed.
- insist that any neighbours do the same, help them if needed.
With these simple precautions the risk of fire damage is very small.
La Palma was in the news in August 2009 due to forest fires on the southern tip of the island.
Many of the news reports of the extent of the damage were greatly exacurated, many were wildly inaccurate.
The press reported 4000 people evacuated from the island, hundreds of houses destroyed, most of the forests destroyed, they said that the observatory was threatened and the island was consumed by flames. There were even reports of mass evacuations by boat.
The damage
In fact the fires only burned in the very southern part of the island and damaged less than 2% of the pine forests on the island. Somewhere between 500 and 1000 people left their homes temporarily and returned the following day. No one had to leave the island. Only 30 houses were damaged, plus some outbuildings. No people died or were injured but a few dozen domestic animals were killed, some grape vines and lots of weeds were burnt. Nobody was evacuated from the island.
A handful of tourists missed their flights and one hotel had a smokey 24 hours.
For the people directly affected it was a disaster and very frightening, but for the majority of the island it was business as usual.
See www.islalapalma.com/en/forestfires.html for more details.
The pine forests
People talk about the forests being destroyed but that is not accurate. The grass, shrubs and pine needles on the ground burn, as do the dead pine needles hanging on the trees. The trees themselves get scorched but not burnt. The grass recovers after the next rain, the shrubs may take a few years to recover but due to their deep roots the pine trees start to sprout green shoots within weeks and recover substantially after the first winter.
The danger period?
Forest fires can occur in July and August when the vegetation is dried out and the weather is hot. A major fire occurs about once every 5 years, almost always they are high up in the pine forests on the hills up above the villages. Usually no houses are affected.
Fire protection services.
The forest fire protection services are active all year round cleaning up the forests and improving installations. From mid-june to mid-october their numbers are increased dramatically. In the north of the island large networks of high pressure water pipes have been laid and fire-breaks have been made. This helps to contain the fires and allow the fire services to bring them inder control quickly.
Preventative action
House owners take simple precautions to prevent their houses being damaged.
There are 2 dangers, one is fire creeping along the ground, the other is sparks blown by the wind.
The main precautions are:
- make concrete and gravel areas directly around the house, make a fire proof border of about 2 to 5 metres,
- make sure the house has no exposed wood,
- plant a garden with flowers, cactus and shrubs around the house,
- clear all grass and wild shrubs within 20 metres of the buildings,
- don't leave piles of wood near the house,
- when you are not there (in july and august) put all burnable objects (plastic garden furniture!) in a protected area away from the house, inside the house or in a shed.
- insist that any neighbours do the same, help them if needed.
With these simple precautions the risk of fire damage is very small.
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