Spanish Repo threat with implications in the UK

elkab2009

Hello All,

I want to ask a mortgage related question on behalf of a relative:

The situation is the they have a house in Spain and the mortgage is with a large spanish bank. However, they have been experiencing financial difficulties since early last year and the bank had given them an interest only option for six months. That 6 times has lapsed and the bank has put them back on repayment which works out to £1500 per month due to the weakness of the GBP.

They are struggling to meet the payments and are 3 months in areas and tried to hand the keys back to the bank and the bank has refused to accept the keys. However, the bank is now threatening to commence repossession proceedings. The implications are that the bank will want to put a charge on their house here in the UK.

Is there anyway of avoiding or getting around the spanish bank putting a charge on the house in the UK? Is it possible to setup a company and transfer the house into that for example I don't know.

Kind regards,

elkab2009

elkab2009

bump

I was hoping that one of you knowledgeable folks could give any ideas.

regards,

elkab2009

Trollfever

My guess is that after the property has been sold, the residual debt to the Spanish Bank will be sold to a UK based debt collection company who will chase your relative for the next 12 years.

Transfer to a Ltd company could be voided on bankruptcy.

Conrad

I would look into transfering to a third party or limited co if I were you, but if there is a UK mortgage this becomes a lot more complex. I think I would sell up the UK property very quickly for a cheap price and move into rented and hide the money offshore.

elkab2009

Conrad wrote: »

I would look into transfering to a third party or limited co if I were you, but if there is a UK mortgage this becomes a lot more complex. I think I would sell up the UK property very quickly for a cheap price and move into rented and hide the money offshore.

Thanks for your input, the problem with selling up the uk property is that the property is now in negative equity and it still has a mortgage on it. Actually the mortgage has only been going for about 4 years.

The previous house was sold to get the cash for the deposit for the house in Spain as the plan was originally to migrate to Spain. However, circumstances did change and they had to buy the present house in the uk ending up with two mortgages!

I guess transferring the property to a limited company means changing to a commercial mortgage and all of the complications that go with it.

regards,

elkab2009

Conrad

They will not be able to transfer the UK property to a LTD company without a substantial amount of equity, so thats a dead end.

Why not just sell the Spannish property - you imply there is equity?

If there is no equity anywhere then I personally would look into going Bankcrupt and ending all this now.
My Brother did this and despite what some internet warriors will say, it was the best thing he ever did - he walked away from a wall of misery and started fresh, avoiding what could have been decades of anxst. And yes he kept his Bank account and yes ex bankcrupts can get mortgages after a while with a large deposit.

silvercar

They are struggling to meet the payments and are 3 months in areas and tried to hand the keys back to the bank and the bank has refused to accept the keys. However, the bank is now threatening to commence repossession proceedings. The implications are that the bank will want to put a charge on their house here in the UK.

Is there anyway of avoiding or getting around the spanish bank putting a charge on the house in the UK? Is it possible to setup a company and transfer the house into that for example I don't know.

Is there any equity in the spanish property? If so the sale shoudl mean that the mortgage will be paid off. Have your relatives tried selling the spanish property?

I don't know whether the rules on repossessions on Spain are like the UK or more like America, where handing the keys back can be the end of the story.

Before going bankrupt in the UK i would check up on spanish bankruptcy rules. You need to make sure that spanish losses would be included in UKbankruptcy.

elkab2009

Conrad wrote: »

They will not be able to transfer the UK property to a LTD company without a substantial amount of equity, so thats a dead end.

Why not just sell the Spannish property - you imply there is equity?

If there is no equity anywhere then I personally would look into going Bankcrupt and ending all this now.
My Brother did this and despite what some internet warriors will say, it was the best thing he ever did - he walked away from a wall of misery and started fresh, avoiding what could have been decades of anxst. And yes he kept his Bank account and yes ex bankcrupts can get mortgages after a while with a large deposit.

Conrad,

This is what I call being "between a rock and a hard place"!

Well the spanish property has been on the market for over 18 months and no interests maybe because it is 30 mins from beach.

My relative has a small limited company and is the sole company director so going bankrupt is a bit tricky I would think.

Thanks anyway you have been really helpful.

regards,

elkab2009

elkab2009

Hi Silvercar,

silvercar wrote: »

Is there any equity in the spanish property? If so the sale shoudl mean that the mortgage will be paid off. Have your relatives tried selling the spanish property?

The property was on the market for over 18 months.

silvercar wrote: »

I don't know whether the rules on repossessions on Spain are like the UK or more like America, where handing the keys back can be the end of the story.

They tried to hand the keys back to the bank in spain but they refused and instead threatened them with repossession proceedings.

silvercar wrote: »

Before going bankrupt in the UK i would check up on spanish bankruptcy rules. You need to make sure that spanish losses would be included in UKbankruptcy.

Very good idea, will get them to look into this.

regards,

elkab2009

maninthestreet

What was the Spanish Bank hoping to achieve by not allowing the keys to be handed back to them, and then threatening to repossess the property?

elkab2009

maninthestreet wrote: »

What was the Spanish Bank hoping to achieve by not allowing the keys to be handed back to them, and then threatening to repossess the property?

It is a very expensive procedure for a bank to repossess a house, I understand in the UK it costs a bank about £30k (I maybe wrong) to repossess a house. I would imagne it would also be costly in Spain as well. I agree that it surely would have been in the best interest of both parties for the bank to just accept the keys but that's bureaucracy for you.

regards,

elkab2009