ex-wife .............

I bought a property a few years ago when I was married. I have since divorced and the property has a mortgage in spain but my ex-wife has been living there. The mortgage is in my name only . She had a bad credit score before our short marriage . She has been paying my mortgage because she lives there with her new partner. I need her to take over the mortgage legally in her own name but she has no income and cannot secure a mortgage .I have no problem in her having the property but I need to be free of this and move on . Any suggestions ?? I also believe if she runs out of money she will default , and then the problem will be worse as I am not in a position to pay the mortgage either.

Dear Sir,

I'm afraid we have no suggestions other than someone buying the property from her and taking on your mortgage.

I’m not sure if you are aware the Euribor, to which all Spanish mortgages are referred to, has fallen dramatically over the last weeks and will continue to do so as the ECB will be lowering the interest rate which translates into cheaper mortgages.

It won't hurt to try any of these also:



1.- Negotiating interest only whilst the property is put up for sale or just to weather off the storm meanwhile. This option is now not feasible as Spanish banks seldom grant interest only and if they do it's really just as a teaser really for one year. Now with this credit crunch they are reluctant to even grant that one year.

2.- You may extend the mortgage repayments to 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 only for those who are left with no other really. The Government is now allowing this change free of charge to the struggling mortgage borrowers. So you will not pay for Notary or Land Registry fees on doing it.

3.- "Dación en pago". This is basically handing over the keys back to the bank and signing a deed at the Notary by which the bank commits itself not to chase you for the debt and consider it discharged for good. The catch is that the property must not be in negative equity. This is more difficult 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 are reading with massive down writings. People borrowed far too much and now their properties may have fallen below their loan. If this happens the Lender will be very reluctant to agree to this "dación en pago" (hand back the keys to the Lender) because the collateral has no or few equity left.

4.- If you already have 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.