Tel: +44 (0) 330 124 1230  Offices in Leeds, Belfast and Spain

Helping People With Foreign Property Debt & Negative Equity.

Death, Divorce and Overseas Debt…

2019-12-19

Demographically speaking, a lot of our clients who purchased pre-2008 are those of retirement age. There have been countless occasions where we have received enquiries from people who have been advised their mortgage term will last long into their 80’s. Whilst this is a difficult subject, it is an issue that we encounter quite frequently. So, what happens to foreign property debt if someone dies or gets divorced?

In the event of death:

Of course, no one wants to think about the unimaginable happening to a loved one however, we all want peace of mind in the event that it does.

Should a borrower pass away the debt does not go with them. The debt owed is included as part of the deceased’s estate. As a result, they will inherit any property but, also inherit any debts. This can be a nasty surprise, especially at a difficult time. This is a burden that no one wants to leave their loved ones with.

Unfortunately, European Banks are not as sympathetic as you may hope. They will continue to pursue any debts owed. Both in the country of origin and your home country.

This difficult situation is further compounded if the property is in negative equity or, a mortgage is nearing the end of its interest-only term. Further to this, there will likely be inheritance tax implications, in either countries or potentially both.

This is part of the reason why it is so important to deal with any property debt issues as soon as you can, so nothing is left to chance.

After a divorce:

If a relationship breaks down, often the two parties will try to reach an amicable agreement in terms of how to split assets, banks accounts and other jointly owned property.

In the case of a property, it is common for one party to decide they will take full ownership. But, this is not as simple as it sounds. To do this you will need to ask the lender to remove a signatory from the mortgage.

This is where difficulty arises, the lender is very unlikely to say yes. Two signatories mean two forms of security and 2 people to pursue if the mortgage is left  unpaid. When you initially signed the mortgage agreement, you both became liable for the full amount. So, if you have a €100,000 mortgage, you and your partner can both be asked to pay the full €100,000, not just €50,000.

If you struggle to pay or default on your mortgage, this makes it even more difficult to resolve, especially if the two parties are not on good terms (to put it nicely).

Not sure what to do?

If you are worried about the prospect of death or divorce and how it may affect your foreign property, we can help.

EU Property Solutions are experienced in dealing with complex mortgage issues, even those involving multiple parties, family feuds and inheritance. You can call us on 0330 124 1230 or email [email protected] for more information on how we can assist you or your loved ones.

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