Your Mortgage in Spain: What Are Your Alternatives?
When money is tight, many people end up in a situation where they cannot pay their bills, sometimes including their mortgage. If you find yourself unable to pay your mortgage on your primary or second home, you may face major consequences. The repercussions of defaulting vary by state and province and by country, and can affect a homeowner for years to come, so he or she must fully realize what defaulting on a mortgage means to financial security and status.
Defaulting on a Spanish mortgage, for example, has very specific consequences. In the past, such defaulting used to be very simple. This was especially true if the homeowner was not a Spanish citizen and the home was a vacation home or second residence. However, this is no longer the case, as Spanish banks can and will pursue non-residents to fulfill their mortgage obligations.
If you find yourself unable to avoid defaulting on your mortgage in Spain, the bank may agree to take the home back. This simple option will save the homeowner a lot of money in court costs and additional interest on the home loan. You cant just turn the keys over to the bank without arranging it, however. The bank has to accept your offer, and they are under no obligation to do so. Homeowners that have a true hardship as a reason for defaulting on a Spanish mortgage will likely be more successful in negotiating a home turnover. If your spouse dies or your income has dropped due to another cause that is no fault of your own, the bank may consider that a valid hardship and allow you to turn in your keys to the home.
If despite your attempts to negotiate a home turnover, the bank refuses your offer, you must then sell your home. The homeowner must sell the home for as much as possible, as the bank that holds the Spanish mortgage will come after him or her for any amount remaining on the loan after the home sale proceeds are paid to the bank. If the shortfall is significant, the bank will be much more likely to pursue you for that amount. They will attempt to collect the remaining amount they are owed in any legal way they can. The bank may collect money by placing liens on any and all assets of the homeowner. Although it may take years to collect on the shortfall by going through the court systems, the bank that holds your Spanish mortgage will not give up until they do.
Even if defaulting on your Spanish mortgage is inevitable, you should work with the bank as much as possible as soon as you know you must default. Showing a willingness to work with the bank can allow a homeowner to walk away from a Spanish mortgage with as little financial cost as possible and still retain full ownership of all his or her other assets.
