Defaulting on Your Mortgage in Spain: What Options Do You Have?
In uncertain economic times, many people find themselves unable to make their mortgage payments. If you find yourself unable to pay your mortgage on your primary or second home, you may face major consequences. The repercussions of defaulting vary by state and province and by country, and can affect a homeowner for years to come, so he or she must fully realize what defaulting on a mortgage means to financial security and status.
Defaulting on mortgages in Spain, for example, has very specific consequences. In the past, such defaulting used to be very simple. This was especially true if the homeowner was not a Spanish citizen and the home was a vacation home or second residence. However, this is no longer the case, as Spanish banks can and will pursue non-residents to fulfill their mortgage obligations.
One option you have when you default on your Spanish mortgage is to turn over the home to the bank. This option will save you money in court costs incurred by the bank when pursuing you for the balance, as well as additional interest on the mortgage during the court battle. But although this is an option, it must first be discussed with the bank. The bank is under no obligation to let you out of the mortgage by taking the home back. They will be rather unlikely to take the home back without good reason such as a hardship. An example of such a hardship would be the death of a spouse or another situation that has caused your income to be drastically cut.
If despite your attempts to negotiate a home turnover, the bank refuses your offer, you must then sell your home. 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 includes placing liens on any assists you may have, such as investment portfolios, your primary residence, and any other property you own that has value. This may take years to do, but the bank will not give up without getting their money.
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.
