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Lending to a company

Introduction: Lending to a company

The investment advisers of a wealthy entrepreneur contacted us to seek assistance in raising equity against an unencumbered property asset in Barcelona, the objective being to purchase new property assets in Spain and Portugal and achieve mortgage lending to a company.

The Transaction

The asset from which the clients were attempting to release capital was a building in central Barcelona valued at close to €17 million with long-term, stable tenants. We knew the process would be challenging from the start, as equity-release is extremely difficult to obtain in Spain and also the ownership structure included entities in Guernsey and Malta.

We were able to explain the profiles, including all relevant supporting documentation, very clearly to the right people at several banks. We were aware that very few bank branches would understand the profile, so having the right contacts was a game changer. Following several meetings with a senior director of one of the banks and the investment advisers of the client, we were able to secure an equity-release mortgage at 54% of the value of the building.

Lending to a company, where the company is Maltese and the owner is a Trust in Guernsey requires a lot of effort to pass the stringent requirements of the lenders. When foreign companies are the applicants for commercial mortgages in Spain it is always more difficult to get an approval and some banks will not even accept applications from foreign companies.

Buyer profile

When foreign companies are the applicants for commercial mortgages in Spain it is always more difficult to get an approval and some banks will not even accept applications from foreign companies. Where the company is Maltese and the owner is a Trust in Guernsey, it requires a lot of effort to pass the stringent requirements of the lenders. Whilst the clients’ advisers were very experienced in property transactions in numerous different countries, they had no experience of dealing with Spanish banks and were having no success in finding intermediaries with the right contacts and experience until they were recommended to approach Mortgage Direct.

As with any large and complex transactions and mortgage lending to a company, the application had to be checked at numerous levels within the bank. The key to the solution here was knowing instinctively who to contact at the lender and then being able to negotiate a bespoke solution to satisfy both lender and client.

Lending to a company solution: Knowing the right contact at the lender

As with any large and complex transactions and commercial mortgages, the application had to be checked at numerous levels within the bank. The key to the solution here was knowing instinctively who to contact at the lender and then being able to negotiate a bespoke solution to satisfy both lender and client. For operations such as this, it is essential that the broker has a very good understanding of financial products and ability to explain financial concepts well in both English and Spanish.

After a couple months of intense negotiations, we were able to secure mortgage of €9,000,000 at a fixed of 2.6% for the full term of 15 years, with only some basic additional requirements.

The Conclusion

Mortgage Direct is able to call assist with extensive advice for commercial mortgages due to contact at banks in Spain and beyond. When we combine this with more than 100 years of financial services experience within the company, Spanish and UK mortgage qualifications, we really offer something that is unique for credit intermediaries in Spain.

Key Characteristics

  • Client: Maltese limited company
  • Property Location: Barcelona
  • Property Value: €16,678,670
  • Mortgage Secured: €9,000,000

Kevin Monger Founding Partner / Mortgage Adviser

Co-founder and a leading expert on Spanish mortgages, holding the credit intermediaries in Spain qualification. Kevin meets regularly with bank commercial directors and previously spent eleven years working for the world's leading actuarial firms.

Mortgages taken out in currencies other than the currency in which you earn are considered Foreign Currency Mortgages. Changes in the exchange rate may therefore increase the equivalent value of your debt. Under the Mortgage Law 5/2019 banks in Spain have introduced mechanisms to protect consumers from exchange-rate risk. For more information, please speak to your broker.

Mortgage Direct, S.L. is a company registered in the Registro de Intermediarios de Crédito Inmobiliario del BdE with the nº D108.

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