Changing to interest only mortgage

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30 Oct 2015 08:20 by tracyh Star rating. 2 posts Send private message

Hello there I am new to the forum.

I want to sell my house in Los Barrios but after having the house valued I find that we are still in negative equity.The estate agent suggested renting the property out for a couple of years then look again at selling. The rent will not cover the mortgage payments! Arghhhhh bangs head against wall!!! 

So....I am now considering going onto an interest only mortgage for a couple of years so that I can still rent the property out as suggested. Has anyone else done this? Is it a costly procedure and will I be hit with crazy repayment costs after the two years?

Many thanks in advance Tracy


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30 Oct 2015 09:09 by Hephaestus Star rating in The Peak District Na.... 1235 posts Send private message

I can only talk for the UK, but the change to interest only would be far more cost effective with the existing lender, however brace yourself for a valuation fee along with admin and legal costs.



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30 Oct 2015 09:13 by Tadd1966 Star rating in Los Montesinos. 1755 posts Send private message

tracyh

I am not sure a bank will give you an interest only mortgage if you intend to rent your property out

Also not informing yoru bank of a rental could cause you bigger problems

Interest only in times of hardship is not costly, normally a set up fee - just remember the amount due will remain the same

Remember any income from house rental may be taxable income

Have you checked the rental market in your area - how many are up for rent, how long have they been up for rent, how many are empty etc.

Be very wary of estate agents and do your research

Sorry to be so negative but reality etc and it is not easy

I wish you good luck

 



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30 Oct 2015 10:07 by tracyh Star rating. 2 posts Send private message

Thanks for the info. To be honest I just can't see any other way out at the moment! The area the house is in is low on rental properties at the moment with proffesional people looking for properties. Sometimes I wish we had never moved to Spain!!! 





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30 Oct 2015 10:11 by Tadd1966 Star rating in Los Montesinos. 1755 posts Send private message

tracyh

It is a horrible sitiuation to be in and sadly many others are in a similar

Only advise I can give is be honest with your bank and be careful many agenst say that about many areas do more research and talk to more agents



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“The greatest enemy of knowledge is not ignorance; it is the illusion of knowledge”



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30 Oct 2015 10:27 by baz1946 Star rating. 2225 posts Send private message

Do you have a Spanish mortgage or UK one on the house in Spain?





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30 Oct 2015 13:24 by mariadecastro Star rating in Algeciras (Cadiz). 9344 posts Send private message

Legal Questions? Speak to Maria Direct

 

Dear Tracyh:

Have you consider a dación en pago? It is an agreement with the Bank which is guided by Law and not depending on commercial value of the house

 



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Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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