Tuesday, January 27, 2009

Mortgage Options

The following article has been taken from the Homes Overseas website which you can visit here. Just to say if you are having problems with your mortgage and need to renegotiate with the bank at Valencia Property we can help you as we have already done for many of our clients here.

A number of people who are struggling to keep up mortgage payments on homes in Spain are being offered alternatives to repossession by some Spanish some banks, reports Spanish Property Insight, citing a recent article in Spanish daily ‘El Pais.

Resolutions include switching to renting with an option to buy, or suspending mortgage payments to a later date by electing to take out a mortgage holiday.

The editorial in El Pais looks at the incident involving Salvador Aguado, who was recently made unemployed at the same time as his mortgage payments increased from €900 to €1,100 per month.

After trying various remedies without success, the manager of his branch of Caixa Catalunya, a Spanish savings bank, offered him the option of converting his mortgage into a rental contract with monthly payments of €650.

“As I have an option to buy, even though the rent is slightly higher than market rates, I’m not throwing money away,” Aguado, who lives in Valencia, told El Pais. “Also the bank is paying the rates and community fees.”

The option to switch mortgages into rental contracts with the opportunity to purchase the home at a later date is one of the ways that Caixa Catalunya is trying to assist mortgage borrowers in financial difficulty. The bank claims that rents are often up to 50% below mortgage repayments.

This option is seen as win-win for both banks, which continue to receive an income and avoid the costly process of foreclosure, and homeowners, who each get to keep their property.

Other mortgage lenders are also trying to help struggling homeowners by introducing other potential solutions such as extending mortgage terms, and adapting interest rates to clients’ ability to pay.

1 comment:

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