Difficult Questions and Answers on Spanish Mortgages

Mortgages are complex matters in any country and Spain is no exception. And as with any financial commitment, they’ve become more complicated for homeowners over the last 18 months.

You may be questioning your home loan in the light of all the uncertainty and instability caused by the Covid pandemic, and if you’re British, by Brexit. You may even be thinking you would be better off if you got rid of your loan entirely.

If this resonates with you, then the following questions and answers may bring you release from the burden of your Spanish mortgage. And remember, if you need professional advice about mortgages, get in touch with our expert team for a free consultation.

Is paying a mortgage in Spain nowadays a good investment?

It depends very much on when you took out the mortgage. If it dates back to the peak of the real estate bubble (2007), the answer is obviously no because house prices have dropped dramatically.

And then there are interest rates – those nowadays are a completely different story to just a few years ago.

How much have property prices fallen since 2007?

In most parts of Spain including the Costa del Sol, Costa de la Luz and Costa Blanca, average prices now are up to 40% below their peak in 2007.

Is there any way to getting out of the big financial burden of a mortgage?

Yes, there is.

The value of a property auctioned by a bank because of repossession hasn’t fallen so forcing your bank to a repossession scenario can lead to you getting a good deal.

Is forcing a repossession legal?

Yes, of course it is legal.  

Several laws since 2012 have set out legal measures to protect the survival of mortgage debtors affected by the financial bubble so using these measures is just as legal as repaying your mortgage.

Will the bank easily agree to it?

Well, not necessarily and not that fast.

Your bank will need to see a certain position backed up by solid legal arguments before they agree. To have the best possibility of getting a good result for you, we recommend you represent your case to the bank with the help of a lawyer with expertise in mortgage law.

Will the bank come after my assets in the UK?

Not if you use the services of an expert lawyer because they will ensure that the only cases brought against the bank are those where there is no debt to be paid after the bank repossesses the property.

In any case, you can pay the small shortfall between the auction value and the pending debt.

In addition to this, Spain banks can no longer use the European Enforcement Order for uncontested debts in UK. The mechanism was illegally used by some of them in the past.

Can they place a charge on my UK property?

In some cases, some banks, making illegal use of the European enforcement order, as mentioned in the previous question, have tried and succeeded in placing charges on UK properties.

However, since Brexit, this is much more difficult, as said.

If your UK property already has a charge on it from a Spanish bank, we can put forward a strong case for it to be removed because, in many cases, the procedure used by the bank lawyers is illegal.

What if I stopped making IBI (local council tax), community fees many years ago?

As a general rule, banks request that these debts be paid off before closing the deal. There are occasions, however, when the banks take care of them.

What if I have someone interested in buying my property?

That’s excellent news because your bank will be much more open to closing the deal if there’s a buyer for the property they will be repossessing. You’ve done part of their job so they see it as a win-win in this case.

In many occasions, however, there isn’t a quick, reasonable way to sell your property. This is because current market prices are generally lower that the pending debt on the property. This is known as negative equity.

In some cases, banks accept a price below market value and close the two deals at once.

How much would the whole deal cost me?

We’re happy to take payment in installments and will charge you the equivalent of one year of your current mortgage repayments. This means it involves no extra cost to you but has the huge plus of getting rid of your big financial burden.

Why should I use CostaLuz Lawyers?

We’re pioneers in the fight for consumer rights in Spain, particularly when it comes to foreign homeowners with a mortgage.

We have been negotiating successful deals for our clients and their mortgages since 2012.

This means we have a unique and solid experience in banks’ reactions and how they behave. We know their strong and weak points giving us and our clients the edge at every meeting table.

As we say ourselves, fighting and winning against Spanish banks is our passion. Get in touch now to find out how we can help you win your mortgage battle.

María Luisa de Castro

DIRECTOR
María founded CostaLuz Lawyers in 2006 and is the Firm’s Director. María is registered Lawyer number 2745 of the Cadiz Bar Association and is licensed to practice in all areas of law throughout Spain. Working closely with her team, María has developed the firm into one of the most highly regarded and trusted Spanish Law Firms acting for English-speaking clients with legal problems in Spain. We're here to help. Contact us today for a free no-obligation consultation.
María Luisa De Castro - Costaluz Lawyers

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