Negative Equity: Property Value Less Than Mortgage
Negative equity is the most common form of property debt however, this does not make it any easier to deal with.
We understand the stress and worry that negative equity can bring, as well as the financial burden it brings.
Read on to find out more about negative equity and how EU Property Solutions can help you.
Negative Equity is defined as the process whereby the value of a property is less than the remaining outstanding mortgage. Although it is now less common, it is still a serious problem in Spain, especially for homeowners who purchased their foreign property in 2007/8.
Much of this Negative Equity stems from the global financial crash in 2007/8. Before this, house prices were massively inflated, and lenders were providing what would now be seen as outrageous mortgages. These inflated prices mean that many homeowners have witnessed a collapse in the price of their property.
Unfortunately, almost everyone in this situation will not see their property return to anywhere near its original value. In fact, the issue has worsened due to Brexit and the Pandemic, with property prices only beginning to recover.
When does Negative Equity become an issue?
The real problem with Negative Equity in Spain arises when you try to sell your property. After the sale, you are responsible for paying the difference between the sale price and the remaining mortgage, also known as the shortfall. So, for example, if you still have €100,000 left to pay but your property only sells for €70,000, you will need to pay the remaining €30,000.
On top of this, if you have missed payments or are already in arrears, you may face penalties and costs added by your lender. Negative equity also makes it more difficult to find a willing buyer, so your property may sell for below market value, further increasing the money you owe.
“Can I just hand back the keys?”
The idea that property in Spain can be abandoned or returned to the bank and be forgotten about is commonly believed, but it goes without saying this is false. Handing back your keys will lead to you being pursued in your home country and could bring legal action or other serious consequences for you.
How Lenders Can Pursue Your Debt
European lenders can recover debts across the continent and in the UK and Ireland. The process for debt recovery in Spain is similar for all lenders, and you will either be pursued by:
- Your original mortgage lender
- A solicitor’s firm based in your home country appointed by your original lender
- A vulture fund that has purchased your debt
The methods used by all these parties are very similar. As well as this, all can be aggressive and persistent. You can read more about their recovery techniques and what they mean for you here.
How To Get Out Of Negative Equity
We understand that you may feel ‘trapped’ by negative equity,’ i.e. unable to sell and unable to pay your mortgage however, there are options.
Unfortunately, as mentioned above, you will likely never see your property return to equity through the value increasing. However, this does not mean you do not have alternative options.
EU Property Solutions have been assisting property owners in Spain for over a decade and have achieved life-changing settlements with all major lenders. Our dedicated and experienced team uses their knowledge and understanding of lenders to help you escape from Negative Equity.
If you are worried about a Negative Equity property in Spain, our team is always available to discuss your case.
Feel free to call us for an obligation-free case review. You can call us on 0330 124 1230 or email us at [email protected]
Can I Sell In Negative Equity?
It is a common misconception that you cannot sell in negative equity. You can sell your property; however, you are responsible for paying the difference between the sale price and the outstanding mortgage, also known as the shortfall. Negative equity also makes it more difficult to find a willing buyer.
Can You Help With My Case?
Often property debt can leave you feeling like you have no options. 99% of the time, we can help those who contact us. There is no ‘one size fits all’ approach, and the answer isn’t always simple but, we always find a solution. The easiest way to find out how we can help is to get in touch.
Why Should I Trust EU Property Solutions?
For over a decade, we have been helping people in exactly the same situation you find yourself in. We understand that you have probably been lied to by the bank, developers, and estate agents. If our amazing results don’t say enough for themselves, check out some of our testimonials or, call our office and speak to a member of the team. You can even chat with previous clients of ours over the phone!
Why not get in contact?
Like we said, the best way to hear how we can help is to contact us today.
All of our initial calls are confidential and completely obligation-free. So, if you don’t like what you hear, you don’t have to go any further.
If you want a solution to your property debt issue, click the button to talk to us.