Factors which make your mortgage unaffordable
When many properties were sold in Spain, they came with ambitious promises of all-year-round rental income, luxury communities, and a higher property value over time, but this hasn’t been the case for many.
When the 2008 crash started, many property developments were halted, property prices plummeted, and owners found it hard to rent their properties to cover their mortgage payments. Unfortunately, the same scenario continues to this day, meaning many property owners are struggling to keep up with the piling debt.
Facing the implications of missed payments
Although Spanish banks are impatient, they generally allow you to miss a few payments. When you miss two to three payments, the lender will become aggressive with repossession proceedings.
In most cases, the lender will sell the property at below market value, which in return means you are responsible for the significant mortgage shortfall. Not only will you have a big end bill, but you will also be liable for legal costs, IBI taxes, and any outstanding community fees.
Dealing with collection in the UK
When the final amount is calculated, you will receive a bill with the outstanding debt. They will first try to collect the debt in Spain, and if this fails, they will follow it to the UK.
It is a misconception that Spanish mortgages cannot be collected in the UK, but many lenders are now collecting the debt (insert link for another blog here) across borders. They do this by instructing debt collectors, selling to vulture funds or appointing UK-based solicitors, which in return can affect your financial security at home.
There are always options
Often the facts about your foreign property can appear to be exclusively negative. However, there are always options available. As with any foreign property debt issue, swift action is the best way to prevent the situation from escalating.
Our experienced, UK-based team at EU Property Solutions works closely with our Spanish legal teams to ensure a favourable outcome in each case we take on. We have been helping clients who struggle to sell their properties for over a decade and have achieved hundreds of life-changing settlements.
If you would like to find out your options, you can get in touch with our team on 0330 124 1230 or email [email protected]
Many believe that if a debt is ignored long enough, it will eventually be written off. While there is some truth to this, any form of communication, attempted contact, or acknowledgement of the debt prevents this from happening. In reality, it is highly unlikely that your mortgage will be forgotten.
You can get a Spanish mortgage with bad credit. Still, it may be more challenging, requiring a larger deposit, proof of stable income, a good debt-to-income ratio, and potentially additional financial products or broker assistance to improve your chances.
If you default on a Spanish mortgage, the bank may foreclose and take ownership through a court-regulated auction, potentially leaving a shortfall that the bank or a third-party debt collector—sometimes based in the UK—can pursue.
