INTEREST ONLY MORTGAGE – TICKING TIME BOMB…
MY MONTHLY PAYMENTS ARE SET TO SPIKE FROM €450 TO €1,200 PCM – CAN YOU HELP ME?
As we all know the property market crazily peaked in 2007/8. From 1996 to 2007, Spain’s national average house prices rose by a whopping 197%.
During this time thousands of foreign investors and those wanting a home in the sun, were lured by interest-free mortgages and rental guarantees. BOTH USELESS & FOUNDLESS IT TRANSPIRES.
It seemed a no brainer at the time as repayments were extremely low and affordable. These were also for a fixed period of 10 to 15 years at a time. 10 to 15 years later…
Across Europe, for British and Irish purchasers, Halifax were the main protagonists of these mortgages and a mixture of loose lending and less than prudent due diligence by all Banks, essentially stored up the problem we now face.
This approach by the Banks then, in turn, encouraged large volumes of UK and Irish to buy abroad. Some were taking equity out of their own home, to commit to a foreign property purchase, to live in and/or retire to.
We are now in a period where borrowers who were on ten to fifteen-year interest-only mortgages, are seeing the end of this ‘honeymoon’ period.
When the mortgage goes to repayment, we have seen huge spikes in the monthly installments with a recent example of a month IO payment rising from €342 up to c€3,000 on repayment.
These increased monthly payments, coupled with:
- IBI Tax Payments, and
- Community Fees ensure many of these holiday home/investments start to cost too much and are unsustainable.
Furthermore, with a rapid decline in values since 2008 many of these borrowers find themselves in Negative Equity.
All enquires to EU Property Solutions are offered an initial free due diligence review by us and our legal team. We would advise we never take on a case that we cannot win.