- Frequently Asked Questions on Spanish Mortgage Debt
- 1. Negotiate an agreement with the original bank modifying the initial mortgage deed:
- 2. Transfer the mortgage to another bank that agrees to apply another type of interest (fixed or referenced to Euribor).
- 3. The signing of a new mortgage, fixed or referenced to the Euribor to cancel the current mortgage loan.
i.a-DEBT SETTLEMENTS—GET RID OF YOUR MORTGAGE DEBT IN SPAIN
i.b-IRPH CLAUSE IN MORTGAGES—THE BIG REFUND
Many Spanish homeowners who financed a property purchase during the financial boom are now experiencing problems with repayments. Banks approved huge mortgages which were unsustainable in the long-term. Now with Brexit in the not too distant future, the uncertainty becomes greater.
A law designed to help mortgage debtors in Spain was passed in 2013. This Law established a minimum for the valuation that banks can give to properties once they are repossessed by them after an auction. In most of the cases, these minimums are very close to the outstanding mortgage debts of today.
If you find yourself nearing those values with your debt, then it is possible to negotiate a settlement with the bank and we can help you with this. We have been providing this service since 2010 with positive results for our clients.
Frequently Asked Questions on Spanish Mortgage Debt
When can I hire this service?
Get in touch with our team as soon as you find yourself having difficulty meeting mortgage repayments and are considering getting rid of your Spanish property.
Can you help me if I stopped making my payments many years ago?
Yes, we can. We can also ensure that you leave without any mortgage-related debts in Spain so when you’re ready… you can come back to Spain and start afresh.
I already have a Law Firm/Debt Collector Firm pursuing me in the UK. Can you still help?
Yes, we can help. Even if you have been placed under the threat of having your assets in the UK embargoed, as on many occasions we have found that the process followed by bank representatives have not been entirely legal.
Will this cost me lots of money?
No, it will not. Our service is priced reasonably and is amortized quickly, as of course hiring us means you stop having to make mortgage repayments. The final fee corresponds to less than what you would pay to the bank during the subsequent 8-10 months.
Will I be left debt free in Spain?
Yes, that is the most remarkable thing about the service: you will be able to come back to Spain and restart a new life with different levels of debts.
i.b-IRPH CLAUSE IN MORTGAGES—THE BIG REFUND
We recently wrote about the European Commision’s decision on the IRPH clause in mortgages.
The IRPH (Index of Reference of Mortgage Loans) is an indicator used by various financial institutions to update the variable interest rate on mortgages. It has been widely criticized as being influenced by banks to suit them; being imposed on mortgage clients without their knowledge or acceptance.
The European Commission’s decision to null the character of the index makes this is an excellent time to study your existing conditions and improve your mortgage contract or, indeed, change your bank to an institution that offers better and more transparent conditions.
Any posterior claims you have made on IRPH related overdue mortgage payments will not be affected by you improving or changing the conditions of your mortgage.
IRPH: What solutions do I have prior to the IRPH decision by the CJEU?
The conclusions of Maciej Szpunar, General Counsel of the Court of Justice of the European Union, on the abusive application of the IRPH clause, will not be announced until the 10th September 2019.
Once the wording of the Judgment is known, the appropriate judicial actions may be initiated. In the meantime, those clients who have IRPH linked mortgages can replace them with the Euribor and enjoy lower monthly payments, without the need of filing a lawsuit.
There are three options:
1. Negotiate an agreement with the original bank modifying the initial mortgage deed:
Your mortgage contract agreement can be updated to reflect a Euribor interest rate instead of the original IRPH rate. This could provide savings of up to 1,200 Euros per year on mortgage repayments.
- The bank can and may refuse, but if it accepts, expect that they will ask for something in return: to increase the linkage or differential …
- These types of operations usually have an associated commission of between 0.1% and 1% of the outstanding capital, plus notary, registry and mortgage manager fees.
2. Transfer the mortgage to another bank that agrees to apply another type of interest (fixed or referenced to Euribor).
Your original bank has 15 days to match or exceed the new offer and we are required to accept the counter offer.
- The associated commission is approximately 0.5% of the outstanding capital (or 0.25% if the contract is more than five years old), plus Notary, Registry and Mortgage management agency fees.
3. The signing of a new mortgage, fixed or referenced to the Euribor to cancel the current mortgage loan.
- This is the more expensive option as the cancellation of the original mortgage loan has its own costs.
- In any of the three above cases: if the CJEU ends up considering the application of this index abusive, you will maintain the right to demand that the bank refund us the extra charge.
In the case of reaching an agreement with your own bank, you need to be mindful of not signing another agreement relating to the IRPH index.