Handing back the keys to the bank.

Hi

I need some advice on my options regarding my mortgage in Spain.  I am seriously thinking of handing the keys to the bank and walking away.  Is this possible and would there be repercussions in doing this?

Basically I purchased the property over 6 years ago.  The price was €198,000.  I got a mortgage for €152,000.  The property is now in negative equity and is worth €95,000 according to similar properties I have seen in local estate agent windows.

I am unemployed as past 4 years, and I have not missed any payments to date.  Although, I am really struggling to keep these payments up.  If I continue to meet the mortgage, and going by todays repayment rates, I will end up paying the bank €244,800 plus €54,600 already paid off the mortgage.  Add this to my deposit, the property will cost in the region of €345,400, which is quite ALARMING!!

I know I will be losing out on my deposit.  But is it really worth continued paying for a property that is costing over 3 times more than what it is worth, when I realistically cannot afford to pay for it and enjoy it.

If I were to hand the keys in what would happen with Community Fees that are also up todate and utility bills.  Can the bank chase me for the debt back in Ireland.

Any advice would be greatly appreciated.

 Would a better option not be to talk to the bank and see if you can have an interest only mortgage for a while?  If you work out what you pay through a mortgage for a property, any property, most people would be surprised so I would just try to put that out of your head.  

The bank can of course come after you which is why I would speak to them.   They will not be keen to have another property on their books.    Good luck whatever you decide - I am sorry it has become difficult for you.

Hi Roly2

Thank you for the reply to my post.  An interest only option is well and good.  However, it does not alleviate the problem and it will also add extra repayments to make up the difference on the property.  I thank you for your concern.  My only comfort is that I know I am not on my own in this situation, as there are 1000's of people in the same boat.

 It sounds like your best option is to organise a DACION EN PAGO, which although seems more of a fable to many than a reality, from experience with family members, they do tend to give it to foreignors before giving it to nationals. It is your only hope of giving it back to the back. The bank can't take repossession of the house that quickly even if they wanted to. The house would always be in your name until the courts decided to return it to the bank. To do a dacion en pago you must prove you cannot afford to pay the mortgage and if the bank manager is on your side that isn't too difficult unless you are earning on a fixed contract in Spain at the moment or declaring Autonomo, even then if you are not earning much they will still consider it. When a bank agrees to a "dacion en pago" they become responsable for all debt related to the house in terms of community charges, water etc You should be left clean not owing a cent. Anything else is not a dacion en pago but a way to get more money out of you at a later stage.  Be careful, I do not recommend you hand the keys back and just walk. It is a criminal offense unless you go to the courts first and declare that yu are bankrupt, you can't pay the mortgage and you ahve to return to yout country. This won't  free you of the bank but it will avoid a criminal offense, according to a Judge I know. I recommend you speak to your bank to find a solution along these lines if you can't keep up the payments. Always best to be upfront and warn them even write them an email or drop of f a letter to the manager and have him/her sign it on receipt so you ahve proof of your movements. You must show good will but be very clear if you can't continue paying. It is not impossible, a family member of mine got one done and dusted in under two months.

good luck

 Always take this into account:

Banks are legally obligued to give to your property a minimum value when repossessing it.

This minimum value is now ( after May 15th), of 70% if it is your first residency and 50% ( if it is not) OF a VALUE which comprises:

Valuation of prinicipal of mortgage loan

Interests

Delay Interests

Legal costs

Much higher, generally, that the market value of the property.

As a matter of fact, there is very low property market in Spain, because... the whole market is controlled by Banks at present. So, enfocing  this Mortgage Debt AId  Law is the most sensible and fair thing to do as there is really no other way to participate in the ( if you can call it so:  "property market"

Hi Maria,

Do you have an email I can speak to you on 

th

Yes. You can email me here:  web@costaluzlawyers.es

Cheers

Maria

Dear CostaHammer:

Please contact me privately so I can give my email address to you

Cheers

Maria

Legal tip 1168. What after defaulting on mortgage payments? 
12 June 2014 @ 12:03 
 

A post which is of most relevance now, due to the new scenario  that a recent decission by the European Court of Justice has brought in regards to if banks can use the executive foreclosure procedure to repossess your property if the " anticipated maturity clause is included" in your mortgage deeds