View more on these topics

Brits struggle with payments on Spanish holiday homes

An increasing number of Brits who have bought Spanish holiday homes are struggling to meet their monthly mortgage payments, law firm DWF has warned.

Higher mortgage interest rates in the Eurozone and the weak pound have been brought to bear on many borrowers who are looking for advice on how to cope with their escalating Spanish mortgages, the firm says.

In Spain mortgage interest rates have gone from 2.5% to 5%.

Antonio Guillén, a Spanish lawyer with DWF’s Manchester office, says that if a property is repossessed and the outstanding mortgage is not covered the lender could issue proceedings in the UK to recoup the money owed.

He says: “The borrower could also be put on a register of bad debtors and be blacklisted in Spain for six years.

“This may not worry UK residents who decide to leave Spain.

“But Spanish lenders are fully aware of the importance of credit ratings in the UK and are now exploring ways to pass on information to UK databases.”

Options for home owners unable to make payments on their Spanish properties include renting them out, extending the mortgage term or remortgaging.

There is also a ‘dación en pago’ option where the property is transferred to the bank in lieu of the outstanding mortgage.

Guillén adds: “Whatever the situation, handing in the keys and simply walking away is one of the worst things you can do.

“It’s worth exploring the options as a rash decision could come back to haunt you at a later date.”


Recommended

Strong demand for commercial seminar

The Mortgage Alliance says renewed interest in the commercial market has resulted in strong demand for its seminar, to be co-hosted with BuildLoan on April 21.

A more accessible route to debt relief

April 6 saw Debt Relief Orders go live. In brief, DROs are available to non-home owners with no other assets, debts of less than £15,000 and disposable income of less than £50 per month.

FSA could cap mutuals’ lending

Lord Turner, chairman of the Financial Services Authority, says a tighter cap on commercial lending for mutuals could result from the bailout of failed society Dunfermline.Turner has written to the chancellor Alistair Darling outlining the reasons behind Dunfermline’s downfall, citing its diversification into commercial lending as a main contributor. The letter reveals that in 2008 […]

Newsletter

News and expert analysis straight to your inbox

Sign up