All EOS blogs All Spain blogs  Start your own blog Start your own blog 

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.

Repossession of European Property
22 February 2017 @ 20:24

Repossession on European Property

What will happen if I go into arrears on my Spanish Mortgage?

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. Many courts in Europe are inundated with repossession cases so the process can take some time.

Repossession, Repossession, Repossession

The process of repossession in Spain is long winded and costly, these costs are added to the loan outstanding. Each loan has a penal rate written into the deed. This penal rate is applied on top of interest and capital due from the minute a loan is late or fully in arrears. Normal Penal Rates are between 3% to 12% but can be higher and are recorded at signing of the mortgage deed.

Once repossessed your lender will then likely market the property. Many properties sold in possession are sold at a far reduced value often around 60% of open market value. This can increase losses for both the Bank and the borrower.

Reality of Defaulting On Foreign Mortgage

Since the financial crisis in 2008 Spain has seen well over a quarter of a million properties repossessed. A staggering figure, and are large proportion of these repossessions are foreign owned properties. Many British and Irish borrowers feel they can “hand back the keys” and walk away from the property thinking the debt is settled and they cannot be pursued in their home country.

European Banks are beginning to become more pro-active in the debt collection. The dust has settled on property market and general economic decline on the continent and Banks have been given the ultimatum to tidy up their loan books. Some have even been sold to Private Equity funds who are looking to make a return for their investors.

How The Banks Can Pursue You

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.

This will become a more prevalent problem and we urge overseas borrowers not to ignore their liabilities abroad. 

European Banks have the ability to pursue overseas borrowers for outstanding debts.

It is as simple as that.

Like 0


briando55 said:
23 February 2017 @ 08:52

All this seems fair enough, when people are defaulting on mortgages (without good reason and appropriate management) they should be facing up to the responsibility.

Similarly when financial institutions like banks provide lending services, they should also face up to any responsibility they have.

I think the saying is that chickens come home to roost.

Leave a comment

You don't have to be registered to leave a comment but it's quicker and easier if you are (and you also can get notified by email when others comment on the post). Please Sign In or Register now.

Name *
Spam protection: 
Your comment * (HTML not allowed)
(Items marked * are required)


This site uses cookies. By continuing to browse you are agreeing to our use of cookies. More information here. x