Property spotlight- Spanish property debt
At EU Property Solutions, a large majority of our clients are people who invested In a property in Spain during the ‘boom’ years.
During the property boom in Spain, there was a massive spike in building and lending activity with numerous large developments built with the foreign investor as the prime target audience. Some of the key names in the property development world at the time included Polaris world, Oceanview, and MRI to name a few.
Bought the ‘Dream’
Naturally, areas in coastal regions such as Costa Del Sol & Costa Blanca were of key interest to the overseas property buyer who was seeking the picturesque, tranquil, holiday location that the brochure sold. Property developers were selling ‘dreams’ to foreign investors and many UK and Irish customers were sold on this ‘dream’ of the luxurious golf and country club or the desire for a property overlooking the sea.
According to the reports of the Bank of Spain, In the period of 1997—2006, the price of housing in Spain had risen about 150% in nominal terms, equivalent to 100% growth in real terms. It is stated that from 2000 to 2009, 5 million new housing units had been added to the existing stock of 20 million.
Some of the areas which we know were affected specifically and have represented clients in, include Roda Golf, Manilva Hills, Corvera, Torrevieja, Estepona, Los Alcazares to name a few.
In this time, it was presumed that buying property in Spain was as ‘safe as houses’, pardon the pun. With a mixture of readily available funding and misinformed purchasers, Banks that were far too willing to lend money and coupled with a corrupt planning regime, this resulted in a toxic concoction that was only ever going to end one way.
Living the Nightmare
Spanish Property debt
After the property bubble burst prices started to fall, buyers became less and less eager and developers, starved of loans by Spanish banks started going bust.
In the lucrative areas where the ‘dreams’ were sold, particularly the coastal regions of the Costas, there are unfinished developments, without water and electricity, and without any prospect of being sold.
For those that were finished, people are left with a property that they no longer want, that is in a deserted and run down development – the dream is now a reality, a harsh and very different one than what was sold.
Many re-mortgaged their own homes in the UK to raise equity which of course will put their own homes now at risk at a time of life where most would want to be retiring and enjoying life.
Interest Only to Repayment – €215 up to €1,560 PCM
Our team has reported a worrying trend in some Spanish mortgage products. Many of these products are now moving away from their 10-year interest only period and moving to repayment.
The issue we are finding is the jump in payment amounts is very substantial.
EU Property Solutions recently completed a settlement for a client whose mortgage was moving from interest-only to repayment, the jump in the payment amount was €1,200+ per month. More worryingly, this repayment period commenced when the client was at retirement age. This highlights the loose lending practices of lenders pre-2008.
Cannot afford repayments?
If you cannot afford to keep paying your mortgage payments in Spain, and cannot afford to sell in negative equity, then are few options, however, there is help at hand.
Terry Bell of EU Property Solutions states, “there are always options when a buyer is in Negative Equity/ faces a mortgage shortfall, abroad if they seek the right advice.
It is about the presentation of the individual case to the lender and assessing all of the client’s financials. Negotiations can be made to ensure the best result is achieved to generate the best yield for all parties. We have achieved a significant amount of debt write-downs for clients across the UK and Ireland and further afield who thought they were saddled with debt.”
“it is imperative to seek the correct advice from experts in this area, armed with this, it is easy to see the future and move forward with impartial and tailored advice.”
Speak to the experts in foreign property debt
The team at EU Property Solutions are on hand all day every day to speak with those suffering at the hands of property debt. We specialise in those worrying about or being chased for mortgage shortfalls overseas or those who need help in reclaiming a lost deposit on an unfinished development.
Call the team today on 0330 124 1230 or speak to us now via our live chat where we are more than happy to discuss your situation and try to plan a way forward for you.