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What are my options if I have fallen in arrears on my Spanish mortgage?

Property Law

Raymundo LarraĆ­n Nesbitt

18th of November 2007

Q. I have fallen into mortgage arrears by 3 months. My bank are not helping at all. I have approached many mortgage/loan companies who can not help as I am in arrears. Can you reccommend a Debt consolidation company here in Southern Spain who can help me re mortgage or refinance.

    A. It is already too late to contact a debt consolidation company after thee months are unpaid, this ought to be done sooner.

    In Spain on defaulting a mortgage loan you are liable with all your personal assets (unlimited liability) including those in the UK, not only the collateral (the dwelling on which the charge was placed in Spain). The bottom line, is that depending on the value of the property and how much is the outstanding mortgage loan adding all execution expenses in despite of the property being sold in a public auction you would still be held liable for the outstanding debt (negative equity).

    The consequences of you defaulting your mortgage payments in Spain can vary widely.

    In Spain, depending on how much you've asked for the loan, even if the property is auctioned off you may still owe the bank money. This is because properties auctioned reach a very low price and you would still owe the bank the difference as well as all the associated costs of the repossession procedure. Your name will be blacklisted in a data base for years and you will not be able to apply for a loan in Spain again. The interest rate ranges from 24-27% compounded p.a. on the full amount (loan, delay interests, costs..) owed.

    In the UK the consequences vary depending if you chose a Spanish or a British bank to request your Spanish mortgage. If it was a Spanish bank then providing the loan was small it is unlikely that the Spanish bank will pursue the debt in the UK because it is expensive for them to do so, although there is always a possibility. However if you applied for a mortgage with a British bank it is more than likely they will pursue your assets in the UK as well.

    At this point I would like to offer you our Mortgage Default Settlement service which includes negotiating with the Spanish bank on your behalf to settle the matter as soon as possible so they do not pursue your UK assets in the future. If you want more information on this service, please contact

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