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Anonymous
10-14-2008, 09:17 AM
we currently owe 234,000euros on our mortgage but will not be able to carry on paying the mortgage payments. Can you please advise what steps we can take. The mortgage is with a spanish bank. Our property is in Moraira, Spain.

Lawbird Lawyer
10-14-2008, 10:29 AM
I would try to renegotiate with the bank more favourable lending conditions. Now under Spanish law it’s free to extend the payment period before a Notary public, it would be free for you. On doing this the monthly repayments would be considerably lower and thus more manageable. The drawback is that on the long run you will be paying much more interests on the property.

Banks are normally open to renegotiate because the last thing they want is for you to fall in arrears. I would try speaking with them and make them realise your current situation.

I believe your calculations are wrong. The only properties which are “safe” from negative equity are those bought approximately before 2002. On you defaulting your mortgage, compound annual delay interests ranging between 24%-29% are applied, plus the bank’s lawyer s fee are added in as well which are approximately 15.000€. To this you must add the expenses of the seizing procedure and selling the property in a public auction which are high as well. As per my article on Bank Repossessions in Spain (http://www.marbella-lawyers.com/articles/showArticle/home-repossessions-in-spain-defaulting-on-mortgage) a property sold in a public auction will fetch at least only 50% -if not less- of the current market value.

The following is a link to a real-life case (27th of July 2009) in which the borrowers defaulted and the bank repossessed the property auctioning it off publicly. No one bid for the property so the lender adjudicated itself the property for 50% of its appraissal value. They still owe the lender after the auction 120,000€ as principal and a further 73,000€ in interests and associated expenses which increases at a compound interest year on end. Their proposal to follow a dación en pago (http://www.marbella-lawyers.com/articles/showArticle/spanish-mortgage-dacion-en-pago-handing-keys-bank) was turned down by their lender as their property was in negative equity.

http://www.elpais.com/articulo/cataluna/quedo/piso/deuda/200000/euros/elpepuespcat/20090727elpcat_3/Tes

So if you bought your property in October 2007 and default now it’s not only 233.000€ you are going to owe the bank, it’s also all the above, so we can easily be speaking of say 290.000€ on a property which will only fetch in a bid on a public auction 160.000€/180.000€. This outstanding owed amount –including all the expenses and fees- will increase over time due to the compound interest.

All the difference still outstanding and owed by yourself (that is 290 – 160 = 130.000€) after the forced sale of the property in a public auction is known as negative equity as per our article on Bank Repossessions in Spain. (http://www.marbella-lawyers.com/articles/showArticle/home-repossessions-in-spain-defaulting-on-mortgage)

So as you can see it’s a very serious matter as the bank can chase your UK assets lodged under the names of all those that signed the mortgage deed either as borrowers and as guarantors should the borrowers lack enough assets. This doesn't mean of course the bank will chase your assets abroad as this has a high expense for them. But they certainly can if they choose to.

That is why if you are 100% sure you will not be able to fire-sell this property as a distressed sale you ought to speak with your bank to try to renegotiate more favourable lending terms.

Please read as well this other thread. (http://www.marbella-lawyers.com/forums/showthread.php?t=65)

Yours faithfully,
Raymundo Larraín Nesbitt

Unregistered
01-20-2009, 12:00 AM
We are interested in what you say about it being free to extend the mortgage time. We asked our bank today and they made lots of excuses to why it would not be a good idea. We are a Spanish/English couple aged 31 and would like to extend from 27 years to 35 or even 40 years so that we can manage the mortgage repayments during these difficult economic times. They said it would cost thousands to change it at notary so is this not true? They also said we should wait until our yearly renewal in July as our amount will go down lots then. We have mortgage of 115,000 euros costing 700 euros a month at 5.88% on a flat bought in 2007 and we are in negative equity because other flats in the block are on market for 90,000 euros. Another story is that we had money stolen by our first bank manager and changed bank via a friend of bank manager. We know we were nieve but the bank manager got us to sign a guarantor of 16,000 and then took the cheque in his name. The B bank do not know where that man is and we have been told it would be very expensive to take it to court.

Therefore we are a young couple who have been wronged by one bank and now would just like to survive these difficult times by extending our mortgage. How can we do it for free and what is the oldest you can be - example to extend to 40 years would be when we are 70 years old. Does it have to be up to when you retire age of 65 only? And does this even matter as we would like to sell the flat as soon as we can but realise that really this will probably be in 3 or 4 years when the property market is getting better again in Spain.

Lawbird Lawyer
01-20-2009, 11:47 AM
Dear Sir/Madam,

Extending the mortgage repayments must be only used as last resort. Although in the short term your mortgage repayments will be lower on the long term you are actually paying much more. So basically it's a solution to weather off the storm.

As written above its free for the borrower providing you request it prior to the 22nd April 2010. If you change any other clause in the mortgage deed you will have to pay the associated expenses.

Your bank must agree to it. The first step is talk to your bank request a full comparative excel spreadsheet on both options to see if the numbers stack up. If you are happy with extending the mortgage repayments then request it from them.

Additional disposition number two. (http://noticias.juridicas.com/base_datos/Fiscal/rdl2-2008.html)

Your partner can translate:

DISPOSICIÓN ADICIONAL SEGUNDA. No sujeción al gravamen establecido en el artículo 31.1 del texto refundido de la Ley del Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados de las escrituras públicas de novación de préstamos con garantía hipotecaria que se refieran a la ampliación del plazo del préstamo.

No obstante lo previsto en el apartado 1 del artículo 31 del texto refundido de la Ley del Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados, no quedarán sujetas a dicho gravamen y se extenderán en papel común las escrituras públicas que documenten la ampliación del plazo de los préstamos con garantía hipotecaria concedidos para la adquisición, construcción y rehabilitación de la vivienda habitual realizadas en el periodo de dos años a contar desde la entrada en vigor de este Real Decreto-ley.

Yours faithfully,
Raymundo Larraín Nesbitt

Unregistered
01-20-2009, 01:11 PM
Muchas gracias

Lawbird Lawyer
01-20-2009, 02:21 PM
You're welcome.

Unregistered
02-20-2009, 05:15 PM
Hi, I have read your comments with interest. We extended our mortgage in September due to financial difficulties and we had to pay in excess of 1400 Euros. Was this prior to the ruling on no charges to extending mortgages, if we should not have been charged do we have some redress with the bank for a rebate, as obviously that amount we had to borrow from family - (if you are having trouble paying the mortgage where do the banks think you are going to get notary fees from).

Any further information you can give us would be appreciated.

Lawbird Lawyer
02-20-2009, 06:11 PM
Dear Sir/Madam,

This law states in its Final Disposition number three that it will be in force as from the time of its publishing in Spain's Official Law Gazette (aka as Boletín Oficial del Estado or B.O.E. for short).

It was published on the 22nd april 2008 (http://www.boe.es/boe/dias/2008/04/22/pdfs/A20740-20748.pdf), the 2 years run out on the 22nd April 2010.

Unregistered
02-20-2009, 10:01 PM
thank you so much for that, it was really helpful. We will approach our bank to find out why we were charged.

Sharon

EmmaR
02-21-2009, 09:51 AM
Our bank manager in Murcia told us that it was free to extend the mortgage term only if you are a Spanish resident. Is this the case?
Thanks.

Lawbird Lawyer
02-23-2009, 09:35 AM
Our bank manager in Murcia told us that it was free to extend the mortgage term only if you are a Spanish resident. Is this the case?
Thanks.

Dear Madam,

The paragraph quoted above specifies the property must be your permanent/main dwelling which implies you have to be resident to take advantage of this option, yes. In fact all the economical measures (http://belegal.com/blog-by-antonio-flores/mortgage-moratorium-much-ado-about-nothing/) taken by the Government to ease the financial situation are really aimed at residents as only they will be able to benefit from them.

DISPOSICIÓN ADICIONAL SEGUNDA. No sujeción al gravamen establecido en el artículo 31.1 del texto refundido de la Ley del Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados de las escrituras públicas de novación de préstamos con garantía hipotecaria que se refieran a la ampliación del plazo del préstamo.

No obstante lo previsto en el apartado 1 del artículo 31 del texto refundido de la Ley del Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados, no quedarán sujetas a dicho gravamen y se extenderán en papel común las escrituras públicas que documenten la ampliación del plazo de los préstamos con garantía hipotecaria concedidos para la adquisición, construcción y rehabilitación de la vivienda habitual realizadas en el periodo de dos años a contar desde la entrada en vigor de este Real Decreto-ley.

Unregistered
03-02-2009, 02:53 PM
I wrote to you previously saying that we have already extended our mortgage in september of last year. We have approached our bank informing them of the law that was passed in April 2008 as we meet all of the criteria for not paying the notary fees for the extension, but they are insistant that we are only exempt from paying the fees if we extend the term of our mortgage by only 2 years, and as we have extended our mortgage by 10 years the law does not count. Are they correct? your help would be appreciated.

Lawbird Lawyer
03-02-2009, 03:14 PM
No, they are incorrect. The law doesn't mention at anytime that the extension has to be for 2 years. No one extends a mortgage for 2 years only, makes no sense financially as it will hardly reduce the monthly repayments which is exactly why one requests this extension in the first place.

This can only be achieved, as it stands to logic, through significant extensions of 10, 15, 20 years which will effectively greatly reduce the monthly repayments (although in the long run you will pay dearly for this privilege with increased interests).

Are you sure you are resident in Spain and this is your main permanent dwelling you are requesting the extension for?

Unregistered
03-02-2009, 07:20 PM
Thank you for your reply I will be showing it to my Bank Manager, in answer to your question we have been resident in spain since 2006, my husband had obtained his certificate of residency in 2007 and I obtained mine in 2008 - 2 months prior to the mortgage extension.

Regards

Lawbird Lawyer
03-03-2009, 10:08 AM
You're welcome Madam.

Laurie
03-12-2009, 10:34 AM
Muchas gracias

Hello – 5 years ago I took out a mortgage to construct a swimming pool and small extension and to carry out minor renovations to my villa – it has become increasingly difficult to meet the mortgage repayments per month so I contacted my bank to extend the term of the loan – the bank agreed but say I must pay all the relevant costs and charges ( about 1500 euros ) I spoke to my bank about what I had read on your forum and I emailed them the new law – I received an email from them saying that the construction of a swimming pool and the renovations I carried out were outside the constraints of the new law – they say the new law was to be applied to mortgages that were taken out only for the purpose of either buying the house – constructing a new house on a piece of land or totally renovating a house from a ruin.
I have copied their email below – Can you please tell me if the bank are correct in their interpretation of the new law .I feel I am entitled to the free mortgage extension.

Hello Eunice,

Regarding to our conversation before, I copy the part of the new law regarding free extension.
Your mortgage was asked to cover costs of swimming pool and alterations of your house, the target of these operations are not incluided in the current law.

"Como medida para favorecer la situación económica
de las familias, a la vista del alza experimentada por los
índices de referencia que se utilizan para fijar las cuantías
de los intereses de los préstamos hipotecarios, en la disposición
adicional segunda, se prevé que en las operaciones
de ampliación del plazo de préstamos con garantía
hipotecaria concedidos para la adquisición, construcción
y rehabilitación de la vivienda habitual, los titulares del
préstamo podrán disfrutar de la no sujeción de la cuota
fija de la modalidad de actos jurídicos documentados, en
el Impuesto sobre Transmisiones Patrimoniales y Actos
Jurídicos Documentados, por el otorgamiento de documentos
notariales, que graven estas operaciones, que
podrán extenderse en papel común.".

Kind regards,

CAM INTERNACIONAL 0569- CALAHONDA, MIJAS

Lawbird Lawyer
03-12-2009, 12:57 PM
Dear Madam,

The law you mention has as an aim to help those struggling mortgage borrowers with their primary residence (three years) by means of providing free mortgage repayment extensions on three accounts.-


1.-Adquisiciónc vivienda habitual. Purchase of primary dwelling.
2.-Construcción v.h. Construction of p.d.
3.-Rehabilitación de v.h. Refurbishment of p.d.

Your query hinges on point three, what is understood by "rehabilitación de la vivienda habitual" which is a legal concept.

The definition comes in Spain's IRPF law.-

Concepto de rehabilitación de vivienda. (http://www.agenciatributaria.es/wps/portal/Informacion?channel=6ff908ac40bca010VgnVCM1000004e f01e0a____&ver=L&site=56d8237c0bc1ff00VgnVCM100000d7005a80____&idioma=es_ES&menu=2&img=7)

A efectos de esta modalidad de deducción, se considera rehabilitación de vivienda habitual las obras realizadas en la misma que cumplan cualquiera de los siguientes requisitos:

1.- Que las obras hayan sido calificadas o declaradas como actuación protegida en materia de rehabilitación de viviendas, en los términos previstos reglamentariamente.

2.- Que las obras tengan por objeto la reconstrucción de la vivienda mediante la consolidación y el tratamiento de las estructuras, fachadas o cubiertas y otras análogas, siempre que el coste global de las operaciones de rehabilitación exceda de los límites establecidos en el Reglamento del Impuesto.

After having examined the definition of what's understood in law by "rehabilitación de la vivienda habitual" one concludes that the type of work you've undertaken (build swimming pool and small extension) are not included in the definition, therefore outside the help of this law.

Therefore your lender is right, I'm sorry, you will have to pay for the expenses.

Yours faithfully,
Raymundo Larraín Nesbitt

Laurie
03-12-2009, 02:31 PM
Thank you very much for your advice - I feel the law should also include people like myself who applied for a mortgage to improve their property - I did not ask for a mortgage to spend the oney on a new car and expensive holidays or to pay off other debts - the whole amount of the mortgag was spent on improving my property - I too am hit very hard by the current financial situation and the free extension of the mortgage would have been very welcome - this is my only home - I feel that I have been discriminated against by the new law - thanks again for your help

Lawbird Lawyer
03-12-2009, 05:30 PM
Dear Laurie,

I understand your concern. Unfortunately I'm helpless to aid you. I can only construe what the law says.

The law passed on is clear on this point.-

Additional disposition number two.


DISPOSICIÓN ADICIONAL SEGUNDA. No sujeción al gravamen establecido en el artículo 31.1 del texto refundido de la Ley del Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados de las escrituras públicas de novación de préstamos con garantía hipotecaria que se refieran a la ampliación del plazo del préstamo.

No obstante lo previsto en el apartado 1 del artículo 31 del texto refundido de la Ley del Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados, no quedarán sujetas a dicho gravamen y se extenderán en papel común las escrituras públicas que documenten la ampliación del plazo de los préstamos con garantía hipotecaria concedidos para la adquisición, construcción y rehabilitación de la vivienda habitual realizadas en el periodo de dos años a contar desde la entrada en vigor de este Real Decreto-ley.

The mortgage loan granted by the lender is not for either of the three reasons allowed by the law regarded to be exempt.-

1.- construction of a permanent dwelling.
2.- purchase of a permanent dwelling
3.- refurbishment of a permanent dwelling

All of us are suffering this financial crisis.

Kind regards,

Laurie
03-13-2009, 02:09 PM
Thanks again for explaning in detail the criteria of the new law

Lawbird Lawyer
03-13-2009, 03:37 PM
Anytime.

Kind regards,

Unregistered
03-26-2009, 07:24 PM
Hi

I have written to you several times before regarding the payment to the notary for the extension on the mortgage term. I note in a reply you have given to someone else you mention 3 years, do you mean that you had to have owned your property for more than three years, or been resident for three years? I am slightly confused.

We spoke to our bank who have been helpful but they say that the Notary have told them that they cannot refund our money as we never told them we were resident!! (they never asked) and that all the paper work has now been completed. Is there a way we can get this money back as the deeds that we signed at the notary actually state our main residence and address as one and the same spanish address, no where does it mention our original address in the uk where we lived when we bought the property off plan in 2004.

Thanks

Lawbird Lawyer
03-27-2009, 11:41 AM
Dear Sir,

Hi

I have written to you several times before regarding the payment to the notary for the extension on the mortgage term.

Must have been one of the other company lawyers who replied.

I note in a reply you have given to someone else you mention 3 years, do you mean that you had to have owned your property for more than three years, or been resident for three years? I am slightly confused.

It's a legal concept in the TRIRPF law. It's a "vivienda habitual" or primary residence. This is not an overseas home you use twice a year for vacation purposes.

You must have been living in it for the last three years full time, permanently. So obviously you must be a fiscal resident in Spain (spend more than 183 days a year living in Spanish territoty). There's just no need for you to be a fiscal resident for the prior three yaers, the law doesn't state that.


We spoke to our bank who have been helpful but they say that the Notary have told them that they cannot refund our money as we never told them we were resident!! (they never asked) and that all the paper work has now been completed. Is there a way we can get this money back as the deeds that we signed at the notary actually state our main residence and address as one and the same spanish address, no where does it mention our original address in the uk where we lived when we bought the property off plan in 2004.

I find it highly unlikely. You never mentioned it at the time. You have to allege you want to make use of this tax benefit on extending the mortgage repayments. Your lawyer, if you hired one, should have pointed this out so you benefitted from this specific tax exemption.

Thanks

You're welcome.

janemar
02-17-2010, 12:57 PM
I am struggling to pay my Mortgage repayments,but am as yet not in arrears.
I have approached the bank and been refused Interest only repayment.
I have also asked about remortgaging(refused)and extending the repayment time currently remaining 14 years but they said as our ages are 46 and 48 this wouldnt be an option.We suggested an appointment with there head office to discuss the situation to be told we cant do this and have to deal through them.
Our business SL is struggling in the climate to continue to keep all our payments up to date and as we also have an additional bank loan and overdraft decreasing our mortgage repayments would give us a chance of survival.
We dont know what else we can do or try.It seems we have practically exausted all options and dont know where to turn or what to try next
CAN YOU HELP PLEASE

Lawbird Lawyer
02-17-2010, 02:32 PM
Dear Madam,

I copy you in our article on this matter:

http://www.eyeonspain.com/forums/posts-long-5402.aspx - 3rd September 2008


Advice to Struggling Mortgage Borrowers

Raymundo Larraín Nesbitt
3rd February 2010

Introduction

Following-up on my article of 2008 on Bank Repossessions in Spain (http://www.marbella-lawyers.com/articles/showArticle/home-repossessions-in-spain-defaulting-on-mortgage) ex-pat landlords are still struggling to remain afloat in 2010.

It is important to clarify that a property on being repossessed still belongs to you, not to the lender. You are the one that appears lodged at the land registry as the title owner. On defaulting a mortgage loan the debt goes personally against you. You will be held liable with all your assets both now and in the future following art 1911 of the Spanish Civil Code.

The above has huge legal implications that most foreign borrowers were not aware of at the time of signing their Spanish mortgages. It means that if the property has slipped into negative equity (i.e. house price fall, or after a repossession procedure) then the outstanding balance is owed by yourself. This debt is pursuable even in your home country against your assets held abroad. As explained in my article on Spanish repossessions, if no-one bids for the property in the public auction the lender will be forced to withhold it for 50% of its appraisal value. Meaning you will owe the outstanding balance plus the repossession expenses incurred (lender’s lawyer’s fees as well as court agent’s fees). The latter will be added to your debt. Post credit crunch it is renowned that professional bidders have vanished into thin air as credit is hard to come by. Bidders are required to lodge before a law court auctioning off the property 30% of the appraisal value. Given the current grim financial environment we can safely assume that in most cases properties being repossessed and auctioned off will end up in lender’s property portfolio. Which explains why lenders have been busy incorporating real estate divisions (http://belegal.com/wordpress/pssst-do-you-want-cheap-spanish-property/)to get rid of their excess property stock.

Spanish banks can and are already chasing-up debts in the UK or elsewhere against any assets you may hold in your home country. They may outsource this work to local UK law firms or else debt-collecting agencies or else simply sell the non-performing mortgage to specialised companies for a fraction of the nominal value. The latter will then chase you. Lenders will not hesitate to send you threatening letters with the hope of avoiding a protracted repossession procedure.

In practice, it will fall down to the amounts owed. It's true that this is often an expensive process for Spanish lenders so they may be reluctant to follow it. Bear in mind the default interest rates agreed within your Mortgage deed normally range between 15-30% compound interest p.a. (not simple interest!). So the debt will mount exponentially over time very quickly. Walking away from your Spanish debt is not an option for most people as it will come later on to haunt you in life. Not to mention that your credit rating in Experian and other credit-rating agencies will be ruined.

Some borrowers in arrears, unable to meet their financial commitments, have simply handed over the keys to their lenders in the hope this would discharge them from their debt liability. Crass error. In Spain to hand over the keys to the lender it must be done through a formal procedure at a Notary public which involves signing a deed relinquishing ownership in exchange of being fully discharged from the mortgage liability. This is known in Spanish as “Dación en Pago de Deuda (http://www.marbella-lawyers.com/articles/showArticle/spanish-mortgage-dacion-en-pago-handing-keys-bank)”. Spanish banks are very surprised at this new phenomenon dubbed “jingle mail” and have been caught completely off-guard because they are used to dealing with Spanish borrowers who no matter what service their mortgage on time even if they have to live on bread and butter. Whereas many foreigners have been walking away as if this was the US thinking no further legal consequences would arise from turning their backs to the problem.

The ability of a solicitor to act on your behalf on this matter is honestly very limited. The ongoing credit crunch doesn’t make it any easier as Spanish banks themselves are increasingly struggling to secure finance lines from abroad. The Bank of Spain has again passed more stringent regulation in 2010 which forces Spanish lenders to increase the provisions set aside for defaulted loans from 20% to 30%. In my opinion this new regulation will have as collateral victims foreign struggling mortgage borrowers as Spanish banks will from now onwards grow increasingly wary of caving in and accepting a dación en pago de deuda (handing over the keys in exchange of the debt).

Historical low interest rates have held at bay repossessions in Spain after they had reached an all-time high in 2008 when the Euribor rate (to which most Spanish mortgages are referred to) peaked on October 2008 (http://belegal.com/wordpress/steep-drop-in-euribor-translates-into-cheaper-mortgages/). If interest rates are once again raised later on in 2010, as experts forecast, in the hope of a market recovery we may face –yet again– a new tidal wave of bank repossessions.


Tips to struggling mortgage borrowers:



1. Negotiate interest-only. This can be arranged whilst the property is put up for sale or just to weather off the storm meanwhile. This option has become increasingly difficult post credit crunch as Spanish banks seldom grant interest-only and if they do, it's really just as a teaser for two years.

2. Extending mortgage repayments (http://www.marbella-lawyers.com/forums/showthread.php?t=49#4) an additional number of years. The drawback is that on doing so the amount of interests you pay on the long run is increased dramatically. So it's only an option for those who are left with no other really. The Government is now allowing this change free of charge to struggling mortgage borrowers providing they are resident and the property is their permanent dwelling. Borrowers will not pay for Notary or Land Registry fees on following it.

3. "Dación en pago (http://www.marbella-lawyers.com/articles/showArticle/spanish-mortgage-dacion-en-pago-handing-keys-bank)". This is basically handing over the keys to the lender (http://www.marbella-lawyers.com/forums/showthread.php?t=218) and signing a deed at the Notary whereby the lender commits itself not to chase you for the debt and consider it discharged for good. Two things are required, the property must not be in negative equity and ideally there should be, as rule-of-thumb, 20% equity so as to offset the lenders’ expenses on taking over the property. It doesn’t matter if you are in arrears, what does matter is that the repossession procedure must not have been initiated by the lender. This is harder than people think because due to the easy credit of the last years the Loan-To-Value of properties was really high, too high in fact, hence all the bank related problems we keep reading with massive writing-offs. People borrowed far too much and now their properties may have fallen below what they borrowed against them. Should this happen the lender will be very reluctant to agree to this "dación en pago de deuda" because the collateral now will have few equity.

4. Selling the property as a distressed asset. If you have already run through the numbers and you are convinced that you will no longer be able to service your mortgage, rather than defaulting and being repossessed, you should very seriously consider selling the property as a distressed asset. The catch again is that the property should not be in negative equity. The more it is the least likelihood there will be anyone interested in it as they in turn are regarding the purchase as an investment and the numbers need to stack up to make it worthwhile for them.

5. Applying for debt consolidation. There are many financial companies offering this service. Basically what they do is group all your debts with different lenders (from credit cards, your mortgage loan, personal loans etc) with only one lender who then extends the loan repayments. The consequence this has is that your monthly repayments are cut down significantly making them more affordable. However the drawback once again is that on extending the financial commitments you will pay more interest on the long run.

6. Swapping over the mortgage to a new lender. Many lenders are now offering to take on existing mortgages paying all the transfer expenses. These lenders normally require the property was bought prior to 2003. In addition, for those who hold collar clauses, (http://belegal.com/wordpress/spain%25e2%2580%2599s-senate-petitions-government-to-suppress-floor-clauses/) swapping over to another lender offers the opportunity to get rid of these bothersome clauses and take advantage of the low interest rates.

In Conclusion

My advice is to draw the red line on a repossession procedure. You should try to avoid this scenario at all costs. As the debt goes personally against the borrower in Spain, you may live a nightmare with debt-collecting agencies, banks or lawyers knocking at your door for years to come. As the compound default interest is fairly high this will be tagged on to what you already owe creating a debt spiral.

Lawbird Lawyer
02-17-2010, 02:33 PM
Please note the information provided in the above article is of general interest only and is not to be construed or intended as substitute for professional legal advice.


Related articles:

• Spanish Mortgages: No Tax on Term Extension or Swapping to Interest only (http://belegal.com/wordpress/spanish-mortgages-no-tax-on-term-extension-or-swapping-to-interest-only/) – 26th June 2009

• Spain’s Senate Petitions Government to Suppress "Floor Clauses" (http://belegal.com/wordpress/spain%25e2%2580%2599s-senate-petitions-government-to-suppress-floor-clauses/) - 23rd of September 2009

• 10 Common Abusive Clauses in Spanish Mortgage Loans (http://www.marbella-lawyers.com/articles/showArticle/10-common-abusive-clauses-in-spanish-mortgage-loans) – 4th of June 2009

• The Dación en Pago Explained (http://www.marbella-lawyers.com/articles/showArticle/spanish-mortgage-dacion-en-pago-handing-keys-bank) -28th March 2009

• Sterling Plunge: Not All Doom and Gloom (http://belegal.com/blog-by-antonio-flores/sterling-plunge-not-all-doom-and-gloom/) -4th January 2009

• Steep Drop in Euribor Translates into Cheaper Mortgages (http://belegal.com/wordpress/steep-drop-in-euribor-translates-into-cheaper-mortgages/) -31st December 2008

• The Dacion en Pago Procedure (http://belegal.com/wordpress/dacion-en-pago/) – 21st November 2009

• Cannot Keep Up Repayments on your Spanish Mortgage? Not All is Lost (http://belegal.com/blog-by-antonio-flores/cannot-keep-up-repayments-on-your-spanish-mortgage-not-all-is-lost/). -9th November 2008

• What are my options if I have fallen in arrears on my Spanish mortgage? (http://www.marbella-lawyers.com/questions/showQuestion/193-What-are-my-options-if-I-have-fallen-in-arrears-on-my-Spanish-mortgage) -18th November 2007

• We are in 3 months of mortgage arrears with a Spanish bank for two properties the developer have not completed properly. What options do we have? (http://www.marbella-lawyers.com/questions/showQuestion/190-We-are-in-3-months-of-mortgage-arrears-with-a-Spanish-bank-for-two-properties-the-developer-have-not-completed-properly--What-are-our-options) -16th September 2007



Lawbird Legal Services (http://www.lawbird.com/) is a law firm with broad experience in Litigation, Corporate and Spanish Property Law.


Yours faithfully,
Raymundo Larraín Nesbitt