When shopping for property in or near Barcelona, the real estate agent might recommend a broker to help you get a mortgage. If you’re not familiar with these terms, this estate agent’s advice might sound reasonable. They usually try to convince you that it will be much easier to buy a flat in Barcelona with a mortgage broker.
However, what is the real reason behind this insistence? Should you use the mortgage advisor suggested by the estate agent? Or should you hire a mortgage broker of your own? Or are there different solutions? All in our article.
Do you have to use a mortgage broker in Barcelona?
If you decide to buy property in Barcelona, as well as carefully looking for the right property, it is also crucial to do your research when it comes to getting a mortgage in Barcelona. In this case, the question may come to your mind, do I really need a mortgage broker?
The answer to this question is entirely dependent on your financial knowledge and confidence in navigating Barcelona’s property market. So, if you are new in Spain and need a financial plan, hiring your own mortgage broker may really help you.
Disadvantages of using estate agent’s broker
In fact, a mortgage broker might work for you, but not the one that an estate agent recommends. They suggest that you use their brokers for two reasons:
1) Finding out your financial situation
The first reason why real estate agents help to get a mortgage advisor is to discover your financial situation. They want to know how much money you have so they can negotiate the property’s price accordingly. Thus, in the context of referring a broker, the agent might ask:
- “How much money do you have in savings?”
- “What percentage of the purchase price do you need in order to buy the property?”
Good stuff to know. If you say you have a lot of money or a decent percentage of the purchase price, the agent might not negotiate the price. Remember, most apartments in Barcelona are overpriced by 5% to 15%, and owners, some of whom are desperate, will negotiate.
I usually interrupt the agent when they ask my clients these questions. I don’t want to lose precious negotiating power. The agents, of course, don’t like my intrusions, especially when I ask: “How much money does the seller have? What? How much? Can you say that again?”
2) Getting around the New Law
The second one is related to New Law. To reserve property in your name, you normally must pay the seller a deposit equal to 10% of the purchase price. It’s generally not refundable. However, under article 621-49 of the Catalan Civil Code, the buyer may withdraw from the sale and get their deposit back if they can show that the designated bank refused to grant them a mortgage.
Book VI allows the buyer of real property to withdraw (resile) from the contract where, having financing by a credit institution been provided for, documentary proof is provided of the refusal of such institution to grant the financing.Article 621 (49)
So if the bank rejects your mortgage application, the seller has to return your deposit (so long as you don’t act in bad faith, such as dismissing the mortgage because you decide not to buy, etc.). Thus, agents want to help you find a mortgage and get around this law.
Therefore, if their broker finds a bank that approves your mortgage, the agent can say: ‘You got a mortgage, and we complied with the law. I’m not returning your deposit’. You might be stuck, even if the mortgage terms are terrible.
Advantages of hiring your own mortgage broker
The main advantage of hiring your own mortgage broker is that you will have someone who has your best interests at heart. Someone who has no tie with any estate company. If you use the estate agent’s in-house mortgage broker, you do not know who they are putting first. Their priority is you or the client that they are selling the house for?
In short, keep your finances and mortgage search totally separate from the agent. Shop for a mortgage yourself by going bank to bank or hire a mortgage broker.
They’re some good ones out there. Just remember, disclosing your finances to the seller or their agent will most likely doom your chances of negotiating a reasonable price for a property that the seller might want to get rid of anyway.
Need advice about mortgage brokers in Barcelona?
For any questions about the mortgage advisors or any other property-purchase inquiries, please feel free to ask Mark Carr by calling at 664 665 365 or email [email protected] and see how we can help you.