PRESS INFORMATION - media enquiries to Sam Dabbs on 07711 672893
Higher mortgage interest rates in the Eurozone, a fall in the value of the pound and the effects of the recession mean that many Britons who have bought holiday homes in Spain are now struggling to meet their monthly repayments, says law firm DWF.
The firm says it has seen a rise in the number of people seeking help to renegotiate their Spanish mortgages or advice on alternative options.
Antonio Guillén, a Spanish lawyer with DWF in Manchester, says the increase in mortgage interest rates from 2.5 to 5 per cent in Spain and the weaker pound have both increased the cost of mortgage repayments. However he warned that buyers who allow their homes to be repossessed could face consequences in the future.
He explains: “Under Spanish law a borrower is liable with his own personal assets for any mortgage signed in Spain. Where a home is repossessed by the bank and sold and the value is not enough to cover the outstanding mortgage, interest and costs, then the bank will be entitled to claim against the borrower for the shortfall. In the case of UK residents this could mean the lender issuing proceedings in the UK.
“The borrower could also be put on a register of bad debtors and be blacklisted in Spain for six years. This may not worry UK residents who decide to leave Spain. However Spanish lenders are fully aware of the importance of credit ratings in the UK and are now exploring ways to pass on information to UK databases.
“Some are looking into signing reciprocity agreements under which they can share information with companies in different countries. Ultimately UK residents who default in Spain may find their credit history affected back in the UK. A decision by the European Court of Justice on 23 November 2006, which clarified the circumstances in which financial institutions may exchange this type of information, has brought this scenario a step closer to reality.”
Options for homeowners in financial difficulties include renting out the property, extending the mortgage term or remortgaging, or ‘dación en pago’ in which the property is transferred to the bank in lieu of the outstanding mortgage.
Antonio Guillén adds: “Whatever the situation, handing in the keys and simply walking away is one of the worst things you can do. It’s worth exploring the options as a rash decision could come back to haunt you at a later date.”
For further information contact firstname.lastname@example.org.
Notes to editors:
DWF LLP is one of the fastest growing law firms in the UK. With over 980 people based in Leeds, Liverpool, London, Manchester and Preston, DWF provides a range of services grouped under the following practice areas:
Banking & Finance
DWF has developed extensive sector-specific expertise in a number of areas including: automotive, education, retail & leisure, legal expenses and food and resourcing. Further information on DWF is available via www.dwf.co.uk.
Media enquiries to:
Tel: 01939 210503 or 07711 672893
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