Feeling the pain in spain

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 per cent to five per cent.

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."

Source: www.mortgagestategy.co.uk