sheamy

Hi all,

unfortunatley I have been struggling with mortgage repayments and my bank Caja Murcia have offered to reduce the mortgage by 40% for 3 years - but from what I can tell this 40% will infact ultimatley be added to my overall balance.

Also I am not sure if the 40% will also aply for when the mortgage is due to change in July to the new (lower) euribor rate, or if they will keep me on 40% of my current rate for the next 3 years.

Has anyone else experience of this offer - or are the any links on the web which explain this?

Many thanks!

Sheamy

livit

Caja Murcia are rumoured to be goin to the great banking leader in the sky.

You may want to look elsewhere or sit it out and see if the Spanish govt bail them out.

In the long run you`ll loose out taking this offer, having said that you need to know if short term you can`t afford not to.

You may want to change lenders before trouble hits, if you take this offer it may well effect change/renewing in the future.

sheamy

Not sure if Caja Murcia going under should adversley affect my mortgage? I would be worried if I had savings there, but I wouldn't think there is anything to worry about for me on that count!

I am just trying to figure out if this 40% they have reduced will come back to bite me later!

Fred James

Of course it will. They aren't giving money away - just delaying the pain!

sheamy

Delay the pain it may do - but I am hopeing that after the 3 years we should be able to sell it for more than it is worth now - or is this ridiculously over optimistic??

snikpoh

The only issue might be the terms offered by whoever takes on the (mortgage) debts. I'm not sure what happens if you want to change provider if this should happen - do you still have early redemption charges etc?

livit

The terms of your mortgage would stay the same if the bank fails, hopefully although the industry is entering unchartered waters, so there is a small chance of an issue.

If you fall behind in your mortgage at the time the bank fails there will be an issue as to whether your a bank asset at that time.

As for the implication of reducing your loan, yes you`ll be affected of the long term, how that pan`s out in the future compared too other borrowers is hard to say, again were into unchartered waters, if in 5 yrs 95% of borrowers have adverse credit history, then the industry may need to adjust its lending criteria.

If you begin to fall behind in payments though, you may find this offer no longer available and the bank will dispose of you before helping you.

The problem with todays current situation is that bank`s are changing the way they operate, its harder to predicted beyond the terms of the loans etc, slightly bending policy to help each party is becoming rare.

GrapeEater

... if we all had a crystal ball !!! Just check with CM to see the yearly payment schedule and ask how the Euribor will affect it over time !

I am interested in this thread as my wife and I went to see CM last week with the same problem (monthly payments too high and a whopping 6.25% now [from 3.4%, 3 years ago]). They offered us an 'interest only' option that would save us a few hundred per month BUT the sting in the tail was that it had to go through the Notary and CM said it was usually about €1500 charge (+time and hassle) so the saving isn't that great for us.

We have to wait until Nov' for the annual price change . But the good(ish) news is that the Bank Manager was predicting our rate would be nearer 2.8% in Nov thus slashing our payments by half - so we are going to tighten our belts (fingers crossed) we can manage until then.

Do other Spanish Banks do the same annual adjustment ? (most banks in UK pass on the cut fairly quickly I think ?).

livit

Most if not all do either yearly of half yearly.

Has advantages and disadvantages.

Unlike the UK they tend to adjust within the high`s and low`s, whereas in the UK not all banks pass on the reductions.

Having said that Spanish banks could change there policy to market conditions.

Fred James

Check the small print. Many mortgages have a minimum interest rate - could be as high as 3.5%

GrapeEater

Thanks, you know how to cheer me up !!!
(why oh why so much small print to small ya day? )

snikpoh

... and many do monthly (using monthly euribor). Halifax Hispana is ours.

livit

Five days ago it was reported that 90% of mortgages would not recieve the drop on the Euribor.

You may find this site handy.

http://www.ausbanc.es/index_ae.htm

This is the most likely outcome most predict will happen in Spain.

Most of the banks in Spain have been removing bad debts in their accounts by taking the assets of the debtors, either at the value of the loan or even at the original market valuation.

Thus it appears that they have not had large losses.

They are now swamped with property, these assets have to be revalued on a regular basis and these revaluations will show huge reductions.

Thus the assets of the bank will reduce. Admitting to these losses at the bad debt stage is what has happened in UK and USA already.

It has still to come to Spain.

UNLESS, they can hang on without revaluation until the market rises, when they could make capital profits by gradually selling off the portfolio as happened at the end of the last recession.

However, this time the amount of surplus property, the lack of available credit (its all locked up in the bank's property 'assets'!) and the stricter revaluation controls of the public company regulators will catch them and they will crash in the same way as those elsewhere.

Its not a happy prospect.

This explains the secret bail out currently happening in Spain that many EU citezens arn`t aware of.

http://firstrung.co.uk/articles.asp?...921&cat=44-0-0

livit

Most set between 3 and 5%.

sheamy

So I have recieved an updated offer from the bank - advice?


Mortgage current debt: €147,051.87 (includes the 3 missed payments)

1. Mortgage revision: SEPTEMBER (Average euribor rate for July. New repayment applicable in September.)
Approximate repayment (considering euribor rate is 2%): €631.40 (for one year)

2. Repayment with the mortgage change in the notary: €530,60 (for one, two or three years).

If you choose the second option, you will have to pay for the notary, registry, taxes, etc. About €1,500.