Urgent Help Needed Please

surrey-ed

Hi,

Other half and I bought a villa in spain 3 years ago as an investment, its a rental property that we rent in the summer. To cut a long story very short, buying and refurbishing the villa has got us into a lot of debt. Both in our twenties and got carried away with things.

We had to lay down £60k deposit on the place, we ended up having our fees increase by £40k and as such this ended up having to be raised by credit cards, loan and £35k loan from parents. Refurbishing has cost £80k

We have following debts:

- Credit Cards - 30k, all defaulted on and passed to debt collectors
- Loans with 2 banks - 20k, all up to date £390 a mth 5ys left
- Loan with parents - 35k, all up to date £375 a mth/8rs left of 10yr loan
- 2 x loans with Mortgage Provider - 20k all up to date 24 yrs left
- Mortgage on 1 bed flat worth 160k, £180k! all up to date 24 yrs left

Assests

1 Bed flat worth £160k but with £180k mortgage

5 bed villa in Spain worth £450k with a £180k mortgage. ON SALE - Bad news being that the villas in the area take 2 - 3 years on average to sell. We are not allowed to remortgage their either due to the terms of the mortagege (£1500 a month)

The villa does however make us £20k a year average after tax from rentals.

Really struggling in the UK and other half has just been offerred a job in Thailand, better pay than in the UK, no tax and accomodation provided. She has accepted the position as we feel its the best way to save money and its a 4 yr contract.

We have decided we can not afford the flat anylonger and cant meet our repayments, can someone advice what our options are please. Should we sell the flat and enter into an IVA or something? Really dont know, want to pay off our debt but cant afford to

What would happen if we stopped paying our mortgage? :eek:


Thanks

homer_j_3

If you stop payments on any loans that are secured against your property, you will get reposessed.

I would recommend that you seek debt advice rather than mortgage advice. I would probably imagine an IVA type arrangment for everything unsecured. This may help.

Look on the Debt Free Wannabe threads and post your circumstances there and I am sure you will get lots of help.

You have clearly overcommitted yourself - however you have property worth £610k based on your valuations and debt of around 300k so if you were to sell then you would be 300k in pocket.

What is stopping you refinancing in spain exactly? You have not given details of all income other than rental income?

surrey-ed

Thanks for replying, will post my details in the other section soon...

We have tried refinancing in Spain, the bank we are with have pointed out a clause in our mortgage conditions that states the terms/payments can not change in the first 8 years. We have to continue to pay the €1900 a month mortgage unless we sell the property which we are trying to do but this takes a long time. Even when a buyer is found the exchanging of contracts can take months and months.

Found it impossible to get a loan out there as you have to be a resident yet they gave us the mortgage!

We did this way to young - 21, 23 and are struggling. Other income:

Me - £1300 a month
Wife - £1400 a month

homer_j_3

Have you tried remortgaging with another spanish bank?

Not sure how easy this would be as I do not directly advise on spanish mortgages. However, have you thought about

Getting your parents to buy the villa off you and consolidating everything into that mortgage as such so you have no mortgage on the UK flat or debt payments to make. You will have the spanish mortgage payment to make only.

You then repay that mortgage amount back until you can rearrange a mortgage to buy the villa back off them again.

You would need to seek legal advice on all of this to see if it is feasible. I know it could be done in this country but not sure about spain?

Just to add

I have spoken very generally about your situation to one of the companies that I use for referral and it may be worth speaking to a mortgage broker who can access a panel of spanish lenders. If you exhaust this route then you know that your only options are IVA and DMP's or possibly repossession and bankruptcy. For the sake of an hour of your time, it could mean that you have a slightly dented credit record than a complete write off.

ixwood

unvestment? Isn't the spanish market the most over valued and supplied in europe?

I'd sell up quick for whatever you can get. Things are only going to get worse....

homer_j_3

The poster has stated that they are trying to sell.

I have told them to get over to the DFW board and taken some of my time to try and offer potential solutions to ensure that they get through this as painless as possible, I don't see what value your comments bring to the post If I am honest? I am sure if an offer came in the OP would consider.

There is a chance that if the OP could get a remortgage in spain and then still sell the property, they will have potentially turned themselves into asset rich and cash rich individuals based on the information here.

Clearly if they cannot then they are in for a bumpy ride - this is something that the OP is clearly struggling with. They don't need you laughing at them to know this.

silvercar

If you didn't have the property in Spain, I would say you should consider voluntary repossession and bankruptcy. All your debts and the negative equity would be wiped out in bankruptcy, you would be discharged within a year.

The bankruptcy has no juristriction overseas so would not affect your work abroad. By the time you came back in 4 years time the bankruptcy would show on your records for another 2 years and so getting credit would be difficult but not impossible.

Only problem is that spanish property. If it takes that long to sell, I wonder if it is truely worth that amount....

SouthCoast

5 bed villa in Spain worth £450k

Does the Spanish business actually stack up as I would question the reality of this figure.

silvercar

SouthCoast wrote: »

Does the Spanish business actually stack up as I would question the reality of this figure.

How can you question something when you don't know the location?

On the marina at Puerto Banus it could be worth £4million!

Rachman_2

Be realistic - the Spanish property market for holiday villas has taken an absolute kicking - if it were worth £450K before (say late 2005/early 2006), I fear (for you) that the real value to sell it today is nearer £330K-350K. There is huge oversupply - mainly because of us and the Irish piling in and upsetting the market to suit us - unfortunately the music stopped over there a long while ago.

In the UK, you are effectively dead in the water. You say you've been borrowing on the Spanish villa - with respect, is that really true. You say you spent £80K refurbing - so where did the rest go - to buy it ? Or actually on other stuff - be honest with yourselves.

You've got yourself into a current £100K of net debt in the UK - and that's before what you've already paid off those debts and ignoring any capital rise in your own flat. You are bust. Your only chip to throw in the Spanish villa - what's it worth to just sell. I'd think at £330K you're probably taking a net £40K off the table (by paying off your UK debts (which my 'honesty' would want to do, but my wallet might be saying a lot different) but you are not losing X thousand every month and you can sleep at night and you are still young enough to have a good life.

If your current UK mortgage deal is coming to an end, you will find it hard to refinance at a reasonable rate - which will make it worse.

If it were me, I'd go bankprut in the UK, get repossessed after checking whether or not they can claw back on my Spanish asset - if they can't - get shut of it cheap and sleep at night.

If you don't pay your mortgage, about two or three months and repossession hearings start - and cross default on other debts - it's a snowball that rapidly gets bigger and overwhelming - so don't not pay unless you are certain you know what you are getting into.

ValuableYouth

As Rachman suggests, you've been a silly pair of !!!! knockers.