Should I sell or hang on?

Just to add to debate, be careful on rental contracts for long term. Do not allow renter longer than 11 months and use a temporary contract. If you use a long term contract they have right to stay for up to 5 years. Also retain control of all utils as this can be used to prove that you use the property as your own home.

Re house valuations. The UK press has indicated that like the UK prices will crash. In Altea prices are holding up. Flats have not moved at all. However stupid Daily Mail readers arrive on the Costa and make stupid offers some 30% below asking prices. Even after the prices have been adjusted down to reflect market.

I have a villa that had a realistic value of 320k 3 years ago, its now at 250k and I get stupid offers of 200k. Rediculous. I think I have dropped enough. You get people looking for the smallest problem and make it seem like the house is in a poor state. Totally unrealistic expecting an 8 year old house to be as new, even though mine is almost as good as new.

Try approaching mortgage brokers for a new mortgage at lower rate. Unlike UK there are still some banks like Santander lending as they have huge cash deposits. It may help to reduce costs.

Property rental agents have been known to let and not pass on the bookings so a watchfull neighbour is useful. Beware the trash renters. I have had 3 UK renters in a row who have damaged property and left bills upaid way above the bond. They must think its funny putting screwdrivers through sky cards etc or leaving aircon on at full all day and night.

Good luck. I am holding my price and riding the storm, estate agents must also look within Eurozone for clients, some dont even advertise within zone. Then the pound/euro makes no difference. If UK they expect seller to make up the 25% UK/euro loss.

I have taken a 40% hit on my second Spanish property. I sold it in approximately 3 weeks from advertising on fotocasa. That is because I priced it low. Yes it's a big hit, I lost a lot of money, but by hanging in there I would have lost probably double.  I didn't use it as it was an investment ( a bad one) and I have another Spanish holiday home. I was also paying an expensive mortgage on it. I expect recovery to take at least 10 years. Spanish house prices will bottom out in 2010 or 2011 by which time Edward Hugh reckons 30% unemployed (worst case).

If your property is an investment (eg you do not use it for holidays), you bought near the top, and have a mortgage on it. The concept of hanging in there simply does not exist

Sounds as if you have done the right thing. we are losing more and more money as time goes on. Our mortgage has doubled and the bank are not being helpful . We are sorely tempted to walk into the bank next time we go to Spain and hand in the keys. Not sure what would happen if we did this but feel we are throwing our money away. The house is an investment , a pension , we also hoped to get a few years use out of it before we sold it but it has brought nothing but worry and stress. I wish I had never entertained the thought of buying abroad and epsecially with the large international property company we purchased through.Sadly, this has been the only risk we have ever taken in life and it has proved to be one huge mistake.

Off to drown my sorrows with the remainder of the Merlot I opened earlier !

 Could I make a suggestion.

The mortgage rate has reduced drastically over the last few months.

It is now around 2% (from 6% 6 months ago).

Try getting a better deal with a different bank, will save you lots.

You must be telepathic  goldwing ! That is exactly what we are doing. We are waiting for another bank to assess us and see if they will take our mortgage on. The payment will go down by at least a third so we are keeping our fingers crossed. It is going to cost us a bit in penalties etc but it is going to be worth it. We have given our current bank a chance to match the offer but they don't seem too keen to keep our custom. We have had to provide a lot of paperwork, it's not like transferring a mortgage in the UK but we hope they will agree to it.

 Thats good, hope it works out.

I was talking to our bank last week just about the housing market (we need to sell a house) to see how / what they are lending to buyers.

They said they were doing lots of mortgages at present, quite a lot transfers plus new ones.

So things are not as bad as everyone says.

Go for it! Good negotiations with Banks with all the rights on your side in order to have a strong position in your dealings.

Thanks for your messages goldwing and maria. We hope to hear soon. It is frustrating having to wait and not know what will happen. We are trying to do everything we can to make sure we pay our mortgage , I just wish the bank could see that. Surely a customer paying a mortgage on a lower rate is better than one who can not pay and has to walk away from the property. With the recession hitting everyone so hard the banks should realise how hard it is  for customers paying the top rate of interest as we are and be prepared to make some allowances. I suppose that is not how things go in business ! Anyway, we are planning to go across in May and enjoy a week in the sun while we still can. Good luck with the sale of your house goldwing !

 Good luck,

Maria

Sorry to hear your story but alas it's happening all over Spain at the moment :(

I'm not sure what it's worth but I've seen on another forum that certain banks in Spain are offering people struggling with their a 50% rest for upto 2 years.

It seems from reading it that you get to pay half the normal mortgage for upto 2 years then it's payable back at either a very small rate added on or at the end of your mortgage bolted on.

It is a government backed scheme so you might want to enquire abou it or I can post the link to the discussion on it.

Manor Park

We've got a mortgage in Spain with Solbank, and over a period of four years the mortgage rate has risen by about 3%. 

There are penalties with early repayments, but we were exploring the possibilities of an English mortgage on our house in England as the rate here (if you can get a mortgage!!) seems to be a lot better!

Just a thought, but have you looked at the temporary possibility of rental?  I didn't particularly want to go that way, but circumstances/illness pushed me along that route.  Have had my house let for two lots of 6months, and same couple want to renew for a further 6 months (all via an agent).  Want to get out there after that tho'!!

Hope that you have success in whatever route you take - and have a nice holiday. in May.

Hi Guys

I am one of the many people bemused by the Spanish interest rates but what I can say is that the rates Have come down.

Most banks work on the 12 month Euribor rate + a certain percent or above.  Which is reviewed every 6 or 12 Months then less 2 months.

IE: my rate is due to change in June but was last revised in Decenber, less 2 Months and your looking at October.

The rate then was horendous as the central bank took forever to review there rates unlike Brown and friends.

My mortgage will half. so before you spend your hard earned cash giving the banks even more of your money.........

CHECK your rate?

CHECK your next review?

You will be suprised!!!!    if you want to check current euribor rates just go on a search engine and type in Euribor rates.

Just a quick word the banks hands are quite held as all mortgages have to go through the Notary and signed off as such.

Good Luck everybody.

Better to own 30% of something than 30% of nothing.

 That's a good point there.  Check when the next review of your mortgage is due.  Ours has come down quite a bit recently.

Also, delza makes a good point about the 50% for 2 years government initiative.  I can't seem to find anything on it but I do remember reading something about it somewhere.  Maybe worth checking that out too.

Justin

Two related posts of the Costaluzlawyers blog:

Legal tip 38. FREE OF CHARGE mortgage relief now! 
Wednesday, February 04, 2009 @ 8:42 AM 

If you do not want to read the law-languaged text below:
 
FREE OF CHARGE… relief for your mortgage payments: If you agree with the Bank to extend the maturity term of your mortgage between May 2008 and April 2010… you will have no Notary and Registry costs and no tax burden attached…
 
We lawyers, should also be charging minimums by the Bar Association in these cases….in my humble opinion.
 
Now for the Law-oriented EOS readers: 
 
Lengthening of maturities of the mortgage loan is a possible way out of difficulties in payment of mortgage instalments,within a novation contract, which is in essence a contract by which the bank and the loan debtor determine new mortgage conditions. 

It is also a very practical measure in present days as, from May 2008 to April 2010, does not incur costs. This is due to the Royal Decree Law 2 / 2008 of April 21, on measures to boost the economic activity, which provides the no subjection to the tax established in article 31.1 of the text of the Law of the transfer tax and Stamp Duty of individual deeds, of those novation mortgage loans which relate to extending the term of the loan. This is part of the Law 2 / 1994 of March 30 on Subrogation and Amendment of Mortgage Loans, which has been subject to significant changes especially in 2003. 

In addition, the Government has promoted an agreement with the various institutions (represented by the AHE, the AEB, the ECSC, UNACC and ASNEF) with the College of Registrar of the Property and Commercial Property in Spain and the General Council of Notaries of Spain, to ensure no Notary and Registrar costs attached to such amendments of the loans. This agreement has mainly affected the Law 2 / 1994 of March 30 on Subrogation and Amendment of Mortgage Loans, whose art. 8 refers to notary and registration fees in subrogation, amending novations and cancellation of credit or mortgage loans.
 
Legal tip 34. Mortgage holidays for property buyers and official credits for companies in Spain 
Wednesday, January 28, 2009 @ 6:19 AM 

Mortgage holidays and financing programms for companies in Spain

ICO ( Official Credit Insitute) Aids for Mortgage holders and small companies in Spain.

At least 35 financial institutions have already signed a contract with the ICO to provide a moratorium on mortgage payments, a measure included in the financial support measures for unemployed families, who can defer payment of half the fee for two years, as announced today by the president of ICO, Aurelio Martinez. Martinez pointed out that out of the 60 financial institutions that have joined the line, promoted bu ICO,he has already signed contracts with at least 35 banks and savings banks. 

At least 35 bodies provide a moratorium on mortgage payments 
 
Santander, BBVA, Caja Madrid, La Caixa, Sabadell y Pastor are among the 60 entities that have joined the partnership agreement of the ICO, which publishes a list on its website which is updated daily. Banca March, Banco Guipuzcoano, Cajasol, Ibercaja, Caja Vital and BBK have also joined. 

Postponement of the mortgage 
Specifically, the line, equipped with 6,000 million euros, will allow the temporary postponement of partial payment obligation of 50% of the mortgage share of the years 2009 and 2010, with a maximum of 500 euros per month. 

The line is aimed for groups in especially difficult circumnstances which are holders of a mortgage on their habitual home of no more than 170,000 euros, which had been formalized before September 1 and who are not in arrears.

 To qualify for this line, the applicant must demonstrate by 2010 one of the following conditions: being unemployed and being paid the subside during the three months before the application, being a self-employed with cessation of activity during that period, being a widow pensioner of someone who has died after the signing of the mortgage, or having incomes below three times the monthly indicator of Public Income Multiple Effects (Iprem). 

The term of payment of the deferred shares will begin in January 2011 and the repayment period may be of three, five, seven or ten years, but in no case it will exceed the term of maturity of the mortgage. The interest rate for these deferred instalments will be variable and will be published fortnightly on the website of the ICO. 

"Low demand for ICO copmpany aids"

 Also, Martinez stated that the liquidity line of the ICO, endowed with 10,000 million euros to meet the financing needs of capital for small and medium enterprises, which are solvent and viable, will succeed. Of this amount, 5.000 million are provided by ICO and 5,000 by credit institutions. 

Martinez acknowledged that the line has so far received "low demand", which attributed to the novelty and assimilated to the lukewarm reception of the initial auction of liquidity. However, he maintained that "there is an avalanche of applications from the self employed and that the line will be used in its totality for sure”

On complaints from some employers who go to banks to apply for these lines and are informed that the ICO has not yet provided liquidity, Martinez considered normal for the staff of the entities to look for responsible outside thei companies . "The staff is working for an entity and it has to defend it above all else” 

And added that since the ICO made the first auction, the line is open to all entities and without limit, he said. " As far as financial institutions come and send proposals to us, we will distribute liquidity for them. 

The ICO help line was hung on the website of the ICO on December 23. 

Free Translation from Europa Press news at El Economista by Maria de Castro





 

This message was last edited by mariadecastro on 4/14/2009.

This message was last edited by mariadecastro on 4/14/2009.

It's nice to know there are some sympathetic contributors on the site and I am grateful for all your suggestions and advice. We are going to ring the bank today and see if we can use Maria's tip about mortgage relief , thank you Maria. We were hoping to transfer to another bank with better rates but they have turned us down so our only hope now is to see if our bank will reduce the rate or alter the terms.It's all taking a long time , the banks don't do things quickly !

We have enquired about borrowing in the UK and paying off our Spanish mortgage but the rates being offered are very high due to our LTV rate. Also, the change in the exchange rate has gone against us as the house now would cost £60,000 more than it did when we bought it if we changed to sterling !

We currently rent out the house on a short term basis and for the last 2 years have had around 14 weeks of rental. Ideally we would like long term rental, this would go a long way towards helping to pay the mortgage. Things are slower this year and we only have bookings for 3 weeks, the credit crunch seems to be affecting bookings.

Oops, pressed 'post' before I had finished.

Can anyone recommend their bank or mortgage company ? if so, I would be glad to hear about it.

Many thanks