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Thursday, June 19, 2008
Offshore
Parcela
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My parents retired to Spain several years ago - both in their 70s - and took an interest-only loan to part finance their new home. This was a 2 year interest-only loan switching to repayment after that. Their plan was to settle the mortgage at that point through the sale of their home in England. With the collapse of the market in the UK they would only realize a part of the loan (assuming they can find a buyer) and they now face the prospect of defaulting on their Spanish mortgage because they can't meet the revised repayment levels. They have significant equity in the Spanish property - 60% - but only a small monthly income. The prospect of repossession is terrifying to them - enough so that they shared the facts with me. I'm trying to find a way to help them. The size of their repayments is beyond my means so it isn't a matter of me simply helping with the new repayments unfortunately.
The bank has told them that they'll start repossession proceedings after 3 months. Their ages and their income levels prevent them from remortgaging (even though I would co-sign). They have an advisor/broker who has suggested adding me to the property deeds and through that I could take out a more managable mortgage. The fees are very high and would still further deplete their equity but would buy them time to dispose of one or both properties at better than emergency sale prices. This seems like the best option but given my parents' situation I want to research Plan B in case things don't go to Plan A.
I would really appreciate information that could build a Plan B. Once they default past 30 days are they able to sell the property? How long from that initial default are they likely to have before they are evicted? Once that happens are they likely to realize any of their equity or will the bank simply sell to settle their own share? Is there any form of insolvency protection that can give them more time to organize their finances?
I apologise for the long posting but the quality of advice on this site makes me hopeful that the information would be useful. Thank you for reading this,
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19 Jun 2008 10:25 AM
georgia
Villa
I'm in Algorfa (As seen on TV!!!)
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Hi Offshore,
After 3 months they will get a letter from the bank laying down the procedure they will take and it will be passed to another department where they will start to incur legal costs and interest to monies owed.
It can take up to 2 years to evict but obviously you want to nip this in the bud as quickly as possible,at you parents age this will not be good for their health and mental state.
The banks will listen if approached as the last thing they want is to take the property.
Remortgage seems the best option for you but as you rightly say, this is an expensive option in Spain.
You could try contacting Smiley on this forum as he will give you the facts about re-mortgaging costs and the feasable options you have.
Thw owrst case scenario is that the bank will take it and place it at auction,in this case your parents could lose their home and still be landed with the costs.
Talk to the bank,they do not want this to happen as much as you don't.
I hope it works out ok for you and your parents,it is a terrible thing to have to endure.
Reghards
Georgia
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