All things Mortgages with Juanita Casanas

This week we are sharing an interesting and informative interview with Co-Founder of Lionsgate Capital, Juanita Casanas

Juanita grew up in Spain and then travelled for many years, she came back in 2007 and was working for one of the major banks, Santander.

Having worked with Santander for 9 years and throughout that time was very much specialised in helping all the non-resident, high NetWorth individuals.

“During my time at Santander I thought, there are a lot of banks, there are a lot of offers all of which keep changing and I really thought it would be good to set up a company that was specialised in mortgage brokerage, especially for high NetWorth individuals. A brokerage where we could work with all the banks in Spain and private banks in other jurisdictions such as Germany, Luxembourg, Switzerland, UK and Scandinavian countries. So that clients who are buying here In Mallorca, can just come to us and then we will take care of everything and find them the very VERY vest deal.”

Juanita left Santander in 2016 to start Lionsgate Capital with Drew Aaron who is from New York. “Drew is wonderful, we founded Lionsgate Capital together and now 7 years on and we are very happy and proud of what we have been able to accomplish. It has been a long 7 years setting up from scratch, but we have an amazing team behind us and in the end it’s the team that makes it happen.” It is easy to see at Lionsgate how close the team are, not only with their friendly and welcoming manor but in the way that Juanita talks about them with great pride.

“Our experience as a team together with members from different banks with more experience really helps us mark the difference. Our joint experience across the team is over 50 years in the banking industry so we really know the banks inside out. We come from the banks, but we are on the client's side so we really know what we can do to get them the very best deal.”

It is very important for the team at Sandberg Estates to forge trusting relationships with individuals and companies that we can recommend to our clients and help their buying process in Mallorca be as smooth, meaningful and lucrative as possible. We asked Juanita a few questions to gain knowledge from her expertise and industry experience.

We have noticed you are expanding, is that right?

Yes, we can finance anywhere in Spain but our target client or most of our clients are purchasing in the Balearics, Costa Del sol and surrounding areas and we also have clients in Madrid and Barcelona.

Why would cash buyers with liquidity finance a property here in Spain?

Our clients are from all over the world, not only Europe but from the US, Hong Kong, Singapore, and the UAE. I would say all our transactions are from around 1million and up to 30million per property and although 95% of our clients have the funds to buy the property outright, financing it often makes sense. A lot of the time, the wealthier the clients are the more they want to finance.

Here in the Balearics, we have wealth tax which is quite high and can go up to 3.45% of the property value per year and on multimillion euro villas, this is obviously a substantial amount.

Even though they're not tax residents in Spain, most clients will have to pay wealth tax and as mortgages are deductible for Wealth Tax purposes, this really helps the clients save money. As well as that, it is maintaining liquidity. Many of our clients have their funds well invested in portfolios and investments that generate higher returns so why would they take those funds to buy a property at a 0% return when they can continue to invest and finance, paying lower rates and obtain a higher return on investment for their assets.

Can you simplify the mortgage process in Spain, what are the requirements and documentation needed for an application?

Once we have had the first meeting or call with the client, understanding A. what they want to invest in and B. who is buying, (a person or a company) and their financials and preferences. We then ask them for the necessary documents, depending on if they are buying in a personal name or a company, we send them a checklist of what they need. Once submitted, it is only around 2 days until we can submit everything to the banks.

Would you recommend clients consulting with you, to find out possible financing options before finding a property or when they have one already?

That is entirely up to the client, some clients want to contact us before because the property purchase is subject to the mortgage, other clients aren't worried and don’t come to us until they have the property.

The most important thing is that regardless of when they contact us, that they do! No matter who the client is or how much financial knowledge they have in their country, when they buy in Spain it can be very different. It is vital to obtain all the important and valuable information so we can help them make the correct decision on how they can invest intelligently and optimise their investment. That’s why it is important that they do reach out to us and after we give the client all the information, they can decide how they wish to proceed.

What factors determine interest rates on mortgages in Spain and how can our clients secure the best interest rate?

Well, the interest rates are based on the Euribor. Most of the banks in Spain are working on the 12month Euribor but we also have banks that are on the 3month or even the 1month Euribor. They can secure the best interest rate by speaking to us!

It is important to understand that every single bank is different, and they are constantly changing. For example, if you and I were buying a property today, the best bank for you could be a different bank for me or someone else. If we are buying in 6 months time, the best bank for us today may be completely different for us then than it is now. It is important for us to see where we can get the best deal for the client at any specific time.

Are there any specific requirements or considerations for non-residents who want to obtain a mortgage in Spain?

The main thing is that they give their personal guarantee that their income meets the banks requirements. Whether it’s their personal income or the company that they own. It depends where they are tax residents and what currency that they earn in. Not all currencies are accepted which is an important thing to consider.

What are the key differences between a fixed rate and variable mortgage rate and how should clients decide which ones best for them?

It is such a personal decision, again it changes with time. A few years ago, all our clients were going for variable rates but since the rates have shot up this past year, we have a lot of clients going for fixed rates. Due to the increase in the interest rates, the banks have brought out mixed rates as well where they are fixed for the first 2-5 years and are variable thereafter.

It is a very personal choice, if a client is worried and just wants to pay the same amount for the duration of the mortgage then they go for fixed if it’s a good rate. On high-end properties 5 million and above, most of our clients go for a variable rate.

How long does the mortgage usually take to be approved with a Spanish Bank?

Once we receive all the information and submit it, we can usually get an approval within a week to 10 days. From there on we need the official property valuation along with some other steps that we need to take. We always recommend from first contact to completion at the notary around an 8-to-10-week process.

How long does the banks mortgage offer stand for?

The final offer once everything has bene done has a validity of 45 days and most banks allow that to be renewed once, so it would be valid for up to 3 months.

Are there any additional fees or costs that clients should be aware of when obtaining a mortgage in Spain?

Prior to 2019, the clients had to pay the notary, stamp duty, registry administration costs on the mortgage as well as the property purchase. The laws for this have changed and although these costs still exist, they are now the responsibility of the bank. Costs that the clients would incur would be, maybe a bank arrangement fee depending on the bank, home insurance, life insurance all of which are again dependant on the bank.

We always try and minimise these costs and at Lionsgate Capital work on a success fee. Only if we are successful do we get paid, generally the client saves a lot of money, including our fee for the very first year and consecutive years.