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EU Property Solutions- Experts in all Spanish property issues

EU Property Solutions offer professional assistance and advice in all areas of European property in particular, Spain. We can help provide strategies and solutions to solve problematic property issues, negotiate with lenders on debts, help reclaim lost deposits on unfinished developments and help with repossessions and mortgage arrears across Europe. We have offices in London, Belfast and Spain.

Interest-Only Mortgage
26 November 2019

As we all know the property market ended its peak in 2007.

From 1996 to 2007, Spain’s national average house price rose by a whopping 197%. During this time thousands of foreign investors wanted a piece of the pie and were lured by interest free mortgages and rental guarantees.

It seemed a no brainer at the time as repayments were extremely low and affordable for a fixed 10-year time frame. In the UK, Halifax were the main protagonists of these mortgages and a mixture of slack lending and possibly mis-selling encouraged large volumes of UK and Irish to buy abroad, some taking equity out of their own home to purchase the dream home in Spain to retire in.

We are now in a period where borrowers who were on the ten-year interest only mortgages are seeing the end of this period. Capital Repayments spike and we have seen monthly payments double in some instances.

With increased monthly payments coupled with IBI Tax Payments and Community Fees many of these holiday investments start to cost too much a become a loss maker. Furthermore, with a rapid decline in values since 2008 many of these borrowers find themselves in Negative Equity. In most Spanish cases we can surrender the property to the lender and achieve a complete debt write off. 



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Don't Risk Your Financial Future
23 October 2019

A frequently asked question we receive is whether an overseas property debt issue could affect your ability to buy property in the United Kingdom or your home country. Every case is different, the below outline potential scenarios which could affect your future.

  • Many borrowers believe that their only option is to surrender their keys to the bank and walk away from their overseas property. They believe that there will be no repercussions at home.
  • We know through experience that Spanish Lenders place interim charging orders on uncooperative borrowers for UK or Irish homes. This effectively reduces your equity at home!
  • If you intended to sell your property asset to fund another purchase, then your funds obtained would be reduced. To have a clear title to complete the transaction your solicitor would have to release funds to the Spanish lender to remove their charge and have a clear title for the purchaser.

OR

  • Should you have borrowed monies from a UK lender and issued a mortgage for a Spanish Property then your mortgage offer is under the jurisdiction of the United Kingdom.
  • There are instances where the borrower has defaulted on their mortgage. Rather than going through lengthy Spanish Court Processes to achieve a judgment, the lender’s jurisdiction in the United Kingdom allowed them to apply to Credit Agencies to have a default placed on the individual’s credit file.
  • A default is disastrous should you wish to raise funds to purchase through a mortgage. It is unlikely that a lender will offer a mortgage to a borrower who has a default account on their credit report.

We are seeing an increase in Debt Collection Agents and Solicitors being used to pursue debtors.

Many of these Agents are threatening Personal Bankruptcy now and it is becoming apparent aggressive collection methods are being used moving forward.



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Community Fees & IBI Taxes
16 October 2019

EU Property Solutions assist people daily who have significant mortgage arrears and missed community fee payments. Many borrowers who purchased properties in Spain were not aware of the associated costs such as Community Fees and IBI taxes. These additional costs and Mortgage Debt in Spain can result in significant stress.

Community fees are owed to Community Presidents in Spain. These Presidents are charged with ensuring the community in which you have purchased is visibly up to scratch – for example the maintenance of common areas, swimming pool cleaning and general upkeep of grounds. It is important for borrowers to keep up to date with these fees as debt collection can be instructed by Presidents in Spain to the UK and Irish Debt Collection Agents.

IBI taxes are taxes paid to the Spanish Government, it is essentially council tax. These need to be cleared with no arrears for property transactions to take place. Given it is a state debt there is no debt forgiveness available.

If you cannot pay your Spanish mortgage and fall into arrears, then your mortgage balance will increase. Missed payments are added to the balance along with penalties and interest. Furthermore, you risk legal action and ultimately you are putting your home assets and income at risk if you do not act.

If you cannot maintain payments on your Spanish property, then swift action is needed. If not, balances will simply rise and the issue becomes out of control. If you act quickly through a professional intermediary, then the matter can be brought under control and an amicable and desirable outcome achieved.

In most Spanish settlements we can achieve the surrender of the property to the Bank and a complete debt write off, we can even negotiate some Community Fees arrears and IBI tax arrears into the settlement. Knowing this, do not ignore your increasing debt balances.



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Can They Pursue Me In The UK?
09 October 2019

Since the financial crisis in 2008, Spain has seen well over a quarter of a million properties repossessed. A staggering figure! A large proportion of these repossessions are foreign-owned properties. 

EU Property Solutions find it incredible so many British and Irish borrowers feel they can merely “hand back the keys” and walk away from the property thinking they are somehow immune to any consequences once back home.

Many borrowers simply post their keys through a Bank or representing solicitors’ letterbox and make a run for it hoping for the best.

These debtors have the impression that Spanish creditors’ cannot pursue their home country assets and nor that the Banks have the time or resources to pursue overseas. This may be true in respect to small balances but in truth Banks are stepping up their overseas debt collection and debtors with this mind-set could be left to rue this misjudgment.

In order to promote free-trade commerce throughout Europe legal cooperation is essential and thus legal mechanisms are in place to facilitate overseas perusal.  This makes it nigh on impossible for the UK or Irish High Court to raise its own motion on grounds for non-enforcement or review.

Anyone who signs a mortgage deed in Spain, including guarantors, is personally liable for the loan. Any legal action with likely be notified to the Spanish Address on which the mortgage has been placed, and although logical, many overseas borrowers in Ireland and the UK will be unaware of any proceedings against them until the process is gathering apace.

In terms of debt perusal in the UK or Ireland, lenders can look to recover your home assets and many lenders will appoint UK Debt Collection agents and this could lead to an effect on your home country credit report.

The Spanish lender can look to put a charge on your property even if it already has an existing mortgage and can even enforce an Attachment of Earnings Order.  Spanish lenders to seem to be developing a greater appetite for overseas debt perusal given the magnitude of balances and Banking system overhaul.

It is imperative that if you have surrendered your property you communicate with the relevant lender to minimise the exposure and risk of your home assets.



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Overseas Foreign Debt
02 October 2019

EU Property Solutions are proud that we keep growing the number of clients we assist across Europe and in fact the world. Pre - 2008 we saw many investors purchase their property in the sun and a large number of these borrowers have fallen foul of the much-publicised property market decline.

With so many borrowers falling into Negative Equity and property debt EU Property Solutions was incorporated to assist as many individuals as possible. To date we have successfully completed cases in:

 

 

 

 

 

 

 

 

 

 

The bulk of our current works are in Spain and hence our office location there. Spain was significantly affected by the property crash post-2008 and naturally being an area of significant investment for borrowers from UK and Ireland we see thousands affected by the decline.

Looking further afield we have had in the last three months settlements in New Zealand and Hungary. The Hungarian case was another example of poor lending by overseas Banks using the Swiss Franc Currency.

We know the processes involved for each specific lender allowing up to date and current advice being available to our clients.



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What Happens If You Stop Paying Your Foreign Mortgage?
26 September 2019

IF YOU DON’T PAY YOUR OVERSEAS MORTGAGE, then it will likely have the same consequences if you didn’t pay your mortgage in your home country. Many with overseas mortgage debt in Europe seem to be under the illusion that not paying the mortgage will have no consequence to them – this is incorrect.

We regularly deal with the following types of cases:

  • Borrowers with a mortgage greater than the house value stop paying and leave the keys with the lender.
  • Many of these borrowers do not realise they are in Negative Equity and are putting themselves in serious jeopardy – as the outstanding debt can be aggressively pursued back in their own country.
  • If you don’t pay your mortgage, arrears will mount on your account and following a period of greater than three months your lender can commence repossession proceedings.
  • Once repossessed your lender will then market the property. Many properties sold in possession are sold at a far reduced rate value, often around 60% of open market value.
  • If the bank sells the property, you will be left liable for any shortfall balance if the property was in negative equity and this can be collected by lenders in your home country.
  • Increasingly we see instances where lenders have appointed UK Solicitors/Collection Agents and placed a 2nd charge on a borrower’s home.

It is essential not to ignore your lender & to liaise with them if you have any issues paying your mortgage, if not your home assets are at risk.



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Banco Sabadell Mortgage
04 September 2019

Banco Halifax Hispana was incorporated in 1993 to serve the needs of Expat buyers in the Southern Costas in Spain. Many investors took out mortgages with Halifax as they were a trusted UK High Street lender giving them confidence in their overseas property purchase and finance they obtained.

Unfortunately, many borrowers now find that their loans are no longer with Halifax.
See the below timeline:

EU Property Solutions experience with Banco Sabadell to date has been positive. We met with the Bank in their Seville office in April 2019 and the Bank confirmed there are many Non-Performing Loans. They also discussed they are increasing their collection methods in the United Kingdom and Ireland.

EU Property Solutions experience with Banco Sabadell to date has been positive. We met with the Bank in their Seville office in April 2019 and the Bank confirmed there are many Non-Performing Loans. They also discussed they are increasing their collection methods in the United Kingdom and Ireland.

Many investors look to place blame with the Bank, they did not write these mortgages and instead are working with borrowers to end their Spanish Property issues. Their proactive methods and legal approach allow overseas borrowers the opportunity to dispose of their property with minimal costs and issue providing it is done through legal avenues.

We work with all core Spanish lenders and British lenders who still operate there.



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“What If I Die Before My Overseas Mortgage Expires?”
02 September 2019

A tough question but a common theme our team experience here at EU Property Solutions. 

Demographically speaking, a majority of our clients are those of retirement age who purchased property during the boom period in Europe pre-2008. There have been multiple occasions where we have received enquires from people who have advised their mortgage term will last long into their 80’s.

Firstly, this is evidence of “loose-lending” and pre-2008 many lenders did NOT follow proper protocol. Since then many Central Banks’ have become tighter and increased regulation on lending across Europe. Ask the question of how a Bank deems someone of retirement age able to repay a capital repayment mortgage? Madness.

What is most alarming, is that some clients do not know how they can continue to pay the mortgage! Nor, the implications of not paying and if they did die – put simply debt does not disappear.

Should a borrower pass away the debt does not go with them. Instead, it will be put into the deceased’s estate and may have implications in terms of potential inheritance for children, etc. No one would wish to leave this burden on their children.

Accordingly, this is NOT a matter to be avoided, EU Property Solutions have solved troublesome mortgages of this type in Spain, Cyprus, Portugal, France & further afield.



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PROTECTING YOUR UK ASSETS
27 August 2019

EU Property Solutions regularly encounter overseas borrowers who have walked away from a property in Spain simply handing the keys back to the Bank. Many have a flippant attitude believing that Spain’s sperate legal jurisdiction means no liability can be pursued in their home country. This is WRONG!

We have assisted 2 borrowers who had 2nd Charges placed on their homes in the UK due to non-payment of their Spanish Mortgage and failing to liaise with the lender.

A reoccurring theme when first discussing cases with potential clients is an angry attitude towards their lender. Common phrases include “My mortgage was miss-sold” and “I’m not giving them a penny”. EU Property Solutions can relate to the anger and emotion associated for borrowers, but this approach will not resolve the situation and the burden is still with the borrower.

A promised rental yield on the property never materialized and David, unfortunately, fell into arrears with his Spanish mortgage lender and could not make further repayments. The property was in a development between Estepona and Gibraltar on Costa Del Sol and was also in Negative Equity. Due to non-payment the lender took legal action and placed a second charge on his home in the UK.

 We managed to successfully negotiate a significant debt write off whilst disposing of the property.

Part of our agreement with the Bank was to remove the second charge on the client’s home.

This is a similar story to David’s above. Phil fell into arrears with the property, did not engage with his lender and found his property in Birmingham had a second charge on it. We were appointed following a free initial face-to-face consultation and a huge debt write off was achieved along with the removal of the second charge from Phil’s home.



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Handing back the keys – am I still liable?
30 May 2019

Many owners of negative equity or unaffordable property in Spain simply handed back the keys to their overseas lender and walked away after the market collapsed.

A significant majority believe this ended their overseas property ownership and debt – this is incorrect.

As wronged as many feel they have been by the “loose lending” practices of Banks pre-2008, handing back the keys to a branch is not the way to resolve the issue. Many borrowers who followed this incorrect method now face significant shortfall bills that they are liable for.

From our experience, handing back the keys and walking away results in the following issues:

  1. The Bank initiating legal procedures in their home country to repossess and sell the property. Bank sales or forced sales only achieve a maximum of 70% of the open market value increasing losses.
     
  2. Should the Bank seek Judgement in their home state, collection and legal measures can be enforced in your home country. This puts all your assets at risk, including your home.
     
  3. Given the Bank have spent funds on legal processes your chance of a settlement is reduced. They are essentially ‘hacked off’.
     
  4. European Banks look to place second charges on UK property – from here they can force a sale of your home.

Walking away resolves nothing – don’t believe the forums!

Instead you could deal with your situation, liaise with your lender, understand your circumstances and the legal system of the country you purchased in, and appoint an intermediary.

Here’s some advice from our experiences:

  1. Appointing an intermediary removes emotion and anger – many borrowers feel wronged but a legal case of mis-selling isn’t going to end the burden of your debt? An intermediary removes emotional attachment and can liaise with your lender to get the best settlement feasible.
     
  2. Think about things from the Bank’s perspective: they have what they may classify as a non-performing loan to resolve. Amicable negotiations will benefit all involved.
     
  3. Be honest with your Bank. Transparency and a willingness to be honest goes a long way – even if you feel you have been mistreated in the past.

Don’t ever walk away from debt – it will catch up with you.

In some cases you may be able to “hand back the keys”, but it is not as simple as it sounds. The process is known as a Dación en Pago and is a procedure with strict requirements:

  • The property must not be in Negative Equity,
  • The lender must not have started repossession proceedings against the property,
  • You must be up to date and on time with repayments as well as with the Community fees and local taxes. 


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