Your Mortgage in Spain: What Options Do You Have?
If you are like many people today, you may be having trouble making ends meet or are living paycheck to paycheck. Whether the mortgage is on a primary residence or vacation home, defaulting on a mortgage can have serious consequences for the homeowner. These consequences vary by country and can even vary by state or province within the same country, so it is important to understand them fully.
For instance, when you default on a Spanish mortgage, there are certain consequences. In past years, it was possible to default on a Spanish mortgage with little to no loss at all to the homeowner. This used to be true, especially for second residences or vacation homes. But now Spanish banks have become more aggressive about enforcing mortgage terms for all homeowners, even non-Spanish citizens.
In case a homeowner must default on a mortgage in Spain, turning over the home to the bank is often an option. This simple option will save the homeowner a lot of money in court costs and additional interest on the home loan. However, turning the home over to the bank is a process that must be negotiated. The bank has to accept your offer, and they are under no obligation to do so. Homeowners that have a true hardship as a reason for defaulting on a Spanish mortgage will likely be more successful in negotiating a home turnover. If your spouse dies or your income has dropped due to another cause that is no fault of your own, the bank may consider that a valid hardship and allow you to turn in your keys to the home.
If the bank rejects a home turnover offer from the homeowner, he or she will need to try to sell the home quickly. You should try to get as much from the home sale as you can, as you will still be responsible to the bank for any shortfall between the home sale amount and the remaining amount on your Spanish mortgage. They are more likely to do so if the shortfall is large. They will attempt to collect the remaining amount they are owed in any legal way they can. This means you may face liens on any assets you own, including your primary home and investments..
If you must default on your Spanish mortgage, it is vital that you contact the bank as soon as possible to work with them. Working with the bank that holds your Spanish mortgage can result in a fair settlement that benefits both you and the bank with as little impact on your other assets or financial holdings as possible.
