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Taking over a mortgage in Spain

Taking over a mortgage in Spain

Old Aug 30th 2014, 8:41 pm
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Default Taking over a mortgage in Spain

Hi, be gentle!
An elderly friend of mine, who is recently divorced, can no longer pay his mortgage in Spain. He wants me to take over his mortgage, which I am willing to do, however I am not sure how to go about it. The property has a good rental income and is rented out for the whole of the summer months so the revenue is good. I need some advice please. Would his Spanish lender allow us to take over the mortgage??

Thanks in advance

Charlotte
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Old Aug 30th 2014, 9:18 pm
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Default Re: Taking over a mortgage in Spain

Hi and a warm welcome to the Spanish forum on BE. Myself and Fred James are the moderators for the Spanish forums whilst BEVS moderates Europe. Moderators are there to ensure that the site runs smoothly within the rules of BE. This is so that members gain the information that they are looking for and find their experiences on the forums to be friendly and worthwhile.

Problems and complaints should always be addressed to a moderator who will look into the matter and deal with it efficiently and fairly. Our members who post in the Spain Forums are usually friendly and helpful with a wealth of knowledge about the issues of living in Spain. I hope that you enjoy your time participating in the forums.

Please let me know if you need any further help.

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Old Aug 31st 2014, 10:01 am
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Default Re: Taking over a mortgage in Spain

Originally Posted by charlotteloveridge
Hi, be gentle!
An elderly friend of mine, who is recently divorced, can no longer pay his mortgage in Spain. He wants me to take over his mortgage, which I am willing to do, however I am not sure how to go about it. The property has a good rental income and is rented out for the whole of the summer months so the revenue is good. I need some advice please. Would his Spanish lender allow us to take over the mortgage??

Thanks in advance

Charlotte
I presume, from what you've said, that you would be buying the property from him and then using his mortgage to finance it?

If so, then you need to look carefully at the costs involved - not least of which is the transfer tax (ITP = 10% in Valencia?)

As the mortgage is with the property and not the person in Spain, an abogado should be able to do this for you.
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Old Aug 31st 2014, 4:06 pm
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Default Re: Taking over a mortgage in Spain

Personally I would get an up to date valuation on the property.
Prices have fallen drastically in the last few years and the mortgage may now be in negative equity.
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Old Aug 31st 2014, 9:06 pm
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Default Re: Taking over a mortgage in Spain

Hi thanks for the reply. I am not buying the property I am just hoping to take over his mortgage repayments. Is this possible! I have read something about subrogation and transferring a mortgage does anyone know anything about it? Would this still incur a transfer tax? Thanks for the replies
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Old Aug 31st 2014, 11:18 pm
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Default Re: Taking over a mortgage in Spain

You can easily come to an arrangement to pay his mortgage, if that is what you want to do? Just set up a standing order - simples.

However, I would be careful taking over a mortgage without taking over ownership.
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Old Sep 1st 2014, 10:36 am
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Default Re: Taking over a mortgage in Spain

Originally Posted by charlotteloveridge
Hi thanks for the reply. I am not buying the property I am just hoping to take over his mortgage repayments. Is this possible! I have read something about subrogation and transferring a mortgage does anyone know anything about it? Would this still incur a transfer tax? Thanks for the replies
If you take over the mortgage payments oficially with the bank then surely the bank will need a special arrangement because the loan guarantee will be the property and you will be responsible for paying the mortgage until it is finally paid off. As someone mentioned earlier, the value of the house may be less than the mortgage .. and if that were to be the case then you could be getting yourself into a little bit of bother

What missle says is more logical and safe because then the "risk" stays with the owner I would have thought.
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Old Sep 1st 2014, 10:58 am
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Default Re: Taking over a mortgage in Spain

Or you could just send him the money each month to cover the mortgage if that is all you are doing.
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Old Sep 1st 2014, 11:47 am
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Default Re: Taking over a mortgage in Spain

Originally Posted by charlotteloveridge
Hi thanks for the reply. I am not buying the property I am just hoping to take over his mortgage repayments. Is this possible! I have read something about subrogation and transferring a mortgage does anyone know anything about it? Would this still incur a transfer tax? Thanks for the replies
It sounds like you want to take on the mortgage while leaving your friend the rights to the property? I doubt very much that you can do this in Spain, since the property is attached to the mortgage rather than the owner, but also why on earth would a bank transfer the mortgage to someone who isn't the owner? They'd have no collateral - you could just disappear and they'd be left with nothing. Also I'm not sure why you want to do this either -they must be a very good friend for you to effectively buy their house for them.
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Old Sep 1st 2014, 10:53 pm
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Default Re: Taking over a mortgage in Spain

Originally Posted by chopera
It sounds like you want to take on the mortgage while leaving your friend the rights to the property? I doubt very much that you can do this in Spain, since the property is attached to the mortgage rather than the owner, but also why on earth would a bank transfer the mortgage to someone who isn't the owner? They'd have no collateral - you could just disappear and they'd be left with nothing. Also I'm not sure why you want to do this either -they must be a very good friend for you to effectively buy their house for them.
In effect what I said a few posts ago, but even so and with respect do we really have the right to question the OP's motives?
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Old Sep 2nd 2014, 9:04 am
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Default Re: Taking over a mortgage in Spain

Originally Posted by Mitzyboy
In effect what I said a few posts ago, but even so and with respect do we really have the right to question the OP's motives?
Your post doesn't mention that in Spain the mortgage is attached to the property rather than the person and therefore transferring the mortgage to a person rather than a property is very difficult (snikpoh mentions it, but implies that an abogado can sort it out while I implied that this is unlikely). Both our posts talk about why the bank might not allow it because the property is the loan guarantee (I use the word collateral) but I don't see any harm in this since it reinforces the point by explaining it in different words.

I'll go on to say that the bank is even less likely to allow this if the OP is not resident in Spain since, from the bank's point of view, there is an even greater risk of the OP "disappearing" and the bank being left with a bad loan without any collateral. Many South Americans who had taken out mortgages in Spain during the boom just walked away from them (and the property) when the crisis hit by simply returning to their native countries. I really doubt the banks will want to get burnt again.

Finally I didn't directly question the OP's motives but rather emphasised the point that she is potentially being extremely generous. From her post I assume she hopes to receive the rental income from the property to cover the mortgage payments. But if that were the case then I'd question why the owner can't use the rental income to cover the mortgage themselves. But that's between the OP and the owner. Either way, when you have a friend in financial trouble asking for help it can be difficult to think straight and I've known a few people let the urge to help a friend lead them into financial trouble themselves, as well as eventually losing the friend as well. Sometimes it is worth having a cold hearted and anonymous person point out on a forum that what the friend is asking might just be too much.
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Old Sep 2nd 2014, 12:43 pm
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Default Re: Taking over a mortgage in Spain

Originally Posted by chopera
Your post doesn't mention that in Spain the mortgage is attached to the property rather than the person and therefore transferring the mortgage to a person rather than a property is very difficult (snikpoh mentions it, but implies that an abogado can sort it out while I implied that this is unlikely). Both our posts talk about why the bank might not allow it because the property is the loan guarantee (I use the word collateral) but I don't see any harm in this since it reinforces the point by explaining it in different words.

I'll go on to say that the bank is even less likely to allow this if the OP is not resident in Spain since, from the bank's point of view, there is an even greater risk of the OP "disappearing" and the bank being left with a bad loan without any collateral. Many South Americans who had taken out mortgages in Spain during the boom just walked away from them (and the property) when the crisis hit by simply returning to their native countries. I really doubt the banks will want to get burnt again.

Finally I didn't directly question the OP's motives but rather emphasised the point that she is potentially being extremely generous. From her post I assume she hopes to receive the rental income from the property to cover the mortgage payments. But if that were the case then I'd question why the owner can't use the rental income to cover the mortgage themselves. But that's between the OP and the owner. Either way, when you have a friend in financial trouble asking for help it can be difficult to think straight and I've known a few people let the urge to help a friend lead them into financial trouble themselves, as well as eventually losing the friend as well. Sometimes it is worth having a cold hearted and anonymous person point out on a forum that what the friend is asking might just be too much.
Yes indeed ...... thats unfortunately why we have lost so many new posters in the past
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Old Sep 2nd 2014, 9:43 pm
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Default Re: Taking over a mortgage in Spain

Thanks for all the advice! I would like to point out that I wasn't asking for advice on my relationship with my friend and was only seeking mortgage advice!
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Old Sep 3rd 2014, 7:40 am
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Default Re: Taking over a mortgage in Spain

Originally Posted by charlotteloveridge
Thanks for all the advice! I would like to point out that I wasn't asking for advice on my relationship with my friend and was only seeking mortgage advice!
Apologies if it came across that I was doing that
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