If you’re a mortgage holder or applying for a home loan, you’ll be aware that there are myriad types. But you may not have heard of rechargeable mortgages in Spain.
In this article, we look at this interesting option that allows you to recuperate money already paid on your loan.
What is a rechargeable mortgage?
This type of mortgage allows you to recuperate the money you have already paid on your loan. In other words, you ‘recharge’ capital payments that you have already made during the mortgage term.
Why are rechargeable mortgages in Spain useful?
You might want to access a rechargeable mortgage if you’re looking for cheaper loan alternatives.
For example, you may wish to extend your home loan to carry out refurbishment or extension work. Or you may need a personal loan for a car.
The principal benefit of a rechargeable mortgage is that it’s cheaper to take out than a new loan.
There are usually no associated costs with this type of mortgage since you are borrowing money through the loan you already have.
Are you affected by IRPH clause in your Spanish mortgage?
How do they work?
In practice, a rechargeable mortgage works on similar principles to a new mortgage for a higher loan. However, because a rechargeable mortgage is not a new loan, there are no associated costs.
A practical example
The best way to illustrate how rechargeable mortgages in Spain work is with a practical example. Let’s suppose that you took out a mortgage in 2010 and borrowed €150,000.
Since then, you have repaid €70,000 of the initial capital and have €80,000 outstanding.
You decide you’d like to refurbish your kitchen for €30,000. You could finance this by requesting that your bank reloans you the money you have paid so far.
This recharge of your mortgage would leave you with an outstanding capital debt of €120,000 on your loan.
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How can I get a rechargeable mortgage?
As you might expect, banks have strict criteria in place and it isn’t just a case of popping along to your bank and requesting the money!
To qualify for a rechargeable mortgage, you need to fulfil the following conditions:
- You must have contracted your current mortgage loan from January 2008 onwards.
- The amount you want to recharge must be equal to or less than the capital you have already paid off.
- You cannot change the repayment period. Rechargeable mortgages make no difference to how long you have to pay back the loan. So, for example, if you took out your initial loan in 2010 for 30 years and requested a rechargeable mortgage in 2022, your mortgage repayments must still come to an end in 2030.
However, even if you fulfil the above conditions, your application to recharge your mortgage will ultimately depend on your bank.
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Help with mortgages in Spain
At Costaluz Lawyers, we are pioneers in Spain in consumer rights, particularly for mortgages.
We have helped dozens of clients get justice from Spanish banks applying abusive clauses in mortgage contracts and advised many more on the correct course of action.
If you have any issues or queries regarding mortgages in Spain, get in touch with our team for a no-obligation consultation.
Maria Luisa Castro
