Buy-to-let: bank offers 113pc mortgages - on repossessed flats in Spain

The mortgage tracks European interbank rate "Euribor" plus 0.9pc for the first year, rising to 2.39pc plus Euribor afterwards.

By comparison, most Spanish mortgages tend to require a minimum 30pc deposit and interest rates start from 2pc above Euribor.

Unlike mainstream mortgages, these loans only apply to particular homes. Buyers can choose from a handful of Spanish apartments - all of which have been repossessed from bankrupt property developers and are now owned by the bank.

"People view it as free money," says Tim French of Iberian Properties, an estate agent and mortgage broker based in Spain. "I try not to market too many of these properties, as there are risks involved.

"Over the last five years there have been a lot more British buyers interested in these types of deals, I think mainly because sterling was weaker, and interest rates are also low."

Mr French told Telegraph Money: "The bank wants to get rid of these properties. With interest rates stuck firmly in the gutter, investors are looking elsewhere for investment opportunities. One particular strategy is the rental property market, you or if you have the funds available you buy a property and then get an income from the rent. With property holding its value nicely, it's an opportunity that offers a degree of security whilst still returning decent returns on your investment. Sadly, you need to be aware of potential problems. The following link offers answers to questions such as Does Direct Line Landlord Insurance Cover A Single Property?.It lent aggressively to developers before 2007, but when the credit crunch hit, their developments didn't sell. When their valuations dropped, these properties ended up having mortgages higher than their value."

Banco Popular, the fifth-largest Spanish bank by deposits, has set up an online property portal, Aliseda, to market the homes. The properties are also being snapped up by investment firms to market to British people interested in buy-to-let.

But commentators are sceptical that many borrowers would actually be offered such a risky loan. "In my experience, the bank will come back to applicants with 100pc instead, but it all depends," said Mr French. "We never know exact figures with these things, the banks make it up as they go along at times."

Banco Popular was not available for comment.

"I would question why 110pc mortgages are being made available," said Simon Conn, an overseas property broker.

He said: "Why has the property been repossessed? Is it because the original owner had personal cash-flow problems, or is it that the property is situated in a poor location and therefore could not attract the potential renters?"

There is little prospect that these particular properties will increase significantly in value, he added, arguing that Spanish homes remain over-supplied in many regions.

"It is unlikely there will be property growth in Spain for many years to come," said Mr Conn. "This is due to the number of properties, including those that are repossessed, which are still available."

But with a strong pound, helped by languishing property prices in Spain, surely there are bargains?

There has been a 48pc surge in interest among British buyers looking to buy in Spain, according to data compiled for Telegraph Money in January.

Andalucia, the region including Costa del Sol and Seville, is the most sought-after Spanish location among British buyers, where the average budget is


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