Search:     Go  
The Spanish Lawyer Online
The Spanish Lawyer Online
+ Reply to Thread
Page 1 of 3 123 LastLast
Results 1 to 10 of 26

Thread: What to do if I cannot meet the mortgage repayments?

  1. #1
    Anonymous
    Guest

    Default What to do if I cannot meet the mortgage repayments?

    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.

  2. #2
    Senior Member
    Join Date
    Oct 2008
    Location
    Marbella
    Posts
    1,095

    Default

    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 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 was turned down by their lender as their property was in negative equity.

    http://www.elpais.com/articulo/catal...27elpcat_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.

    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.

    Yours faithfully,
    Raymundo Larraín Nesbitt
    Last edited by Lawbird Lawyer; 07-27-2009 at 01:27 PM.

  3. #3
    Unregistered
    Guest

    Unhappy extension of mortgage years for payment

    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.

  4. #4
    Senior Member
    Join Date
    Oct 2008
    Location
    Marbella
    Posts
    1,095

    Default

    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.

    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
    Last edited by Lawbird Lawyer; 01-27-2010 at 05:17 PM.

  5. #5
    Unregistered
    Guest

    Default

    Muchas gracias

  6. #6
    Senior Member
    Join Date
    Oct 2008
    Location
    Marbella
    Posts
    1,095

    Default

    You're welcome.

  7. #7
    Unregistered
    Guest

    Default we have already extended our mortgage

    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.

  8. #8
    Senior Member
    Join Date
    Oct 2008
    Location
    Marbella
    Posts
    1,095

    Default

    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, the 2 years run out on the 22nd April 2010.

  9. #9
    Unregistered
    Guest

    Default we have extended our mortgage already

    thank you so much for that, it was really helpful. We will approach our bank to find out why we were charged.

    Sharon

  10. #10
    Junior Member
    Join Date
    Feb 2009
    Posts
    1

    Default Extending the mortgage term

    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.

+ Reply to Thread

Bookmarks

Posting Permissions

  • You may post new threads
  • You may post replies
  • You may not post attachments
  • You may not edit your posts
  •