Spanish Limited comany and personal liability

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This topic contains 6 replies, has 5 voices, and was last updated by Profile photo of Anonymous Anonymous 7 years, 8 months ago.

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  • #54838
    Profile photo of Anonymous
    Anonymous
    Participant

    I have aproperty in spain which i am struggling to pay for. I bought it as an investment but the mortgage has gone up and i have tenants who are not paying. So ive ended up having to pay all the mortgage myself, which i am struggling with. Now the property is in negative equity. Turned out not to be a good investment after all! I bet there are plenty of other people in the same boat as me, some consolation i guess;-{
    Ive tried to get the mortgage company to change the mortgage to interest only but to no avail and i have solicitors on the case with regards to the tenants, but nothin seems to be working and i can’t see a way out of this mess.
    Im wondering whether if i made a spanish limited company and put the mortgage and property into it would i still be financially liable for the mortgage if i was then unable to meet the payments?
    I’m not that keen on being chased into the uk if i default on the mortgage.

    Can anyone help?

  • #90891
    Profile photo of Inez
    Inez
    Participant

    Hi there, sorry to hear your plight. Unfortunately a spanish sl cannot hold a mortgage via a spanish bank, banks will not lend to a limited company, only private individuals. Only some commercial banks will – but try and find one!

    To transfer everything would cost you another load of notary fees and costs to about 5% of the loan, so not cheap either.

    You could try to return the property to the bank, depending on how much equity there is they may accept it, otherwise you dont really have a lot of choice Im afraid.

  • #90892
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Sally

    Sorry, not an expert but would of thought that you would not be able to transfer the mortgage to a Spanish SL as it would not have any trading history or accounts from previous years to satisfy the lendors criteria.

    Steve

  • #90893
    Profile photo of Anonymous
    Anonymous
    Participant

    “Trned out not to be a good investment after all! I bet there are plenty of other people in the same boat as me, some consolation i guess “

    Sadly a very common problem. Most people feel that they make an investment specially property and its only going to go one way. Anyway I am not here to say what you should have done.

    “ve tried to get the mortgage company to change the mortgage to interest only but to no avail”

    Banks in Spain don’t have interest only. There are few Banks who do/did an interest only for the first two years or so. You can ask the Bank to increase the period of payment this may help. Be ready for paper work.

    “i have solicitors on the case with regards to the tenants, but nothin seems to be working “

    It can take ages as the law is tilted in favour of the tenants.

    I’m wondering whether if i made a Spanish limited company and put the mortgage and property into it would i still be financially liable for the mortgage.
    How do you propose to do this. The Ltd company has to buy/transfer the property. How is the Company going to do this. The transfer will attract taxes around 7%. and has to be done through legal channels

    “if i was then unable to meet the payments “
    The above does not arise.

    I’m not that keen on being chased into the UK if i default on the mortgage.

    Can anyone help?

  • #90894
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Sally

    Reading your post again, I think your best option would be to continue to fight for intrest only payments.

    Ive read on here and elsewhere that people who make a complete nussiance of them selves with there bank manager have had this concession made, against all odds.

    Best of luck

    Steve

  • #90896
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Stevev 6. If Sally, can do that it would be great for her. There is also another snag as she would be changing the terms & the conditions of the original mortgage it might have to be done via the Bl..dy Notary.

  • #91178
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Sally,

    unfortunately the Mortgage Deed surely includes you as debtor and the fact that the property changes hands is not going to alter that fact. If you fail to pay, the property shall be sold at auction or the bank will repossess it; if there is an outstanding amount, the bank might sue you abroad to get it.

    Please note that recently a legislation has been passed to enable the possibility to change mortgage conditions at a reduced cost, therefore I think your best option is to look for a change of mortgage with better conditions or with an additional term, so that instead of 20 years to repay, you would have 30.

    As to the only interest issue, I find it very difficult that you get an offer on those terms, and banks now need money themselves!

    Finally, another option is that you explain plainly to your bank that you are not going to be able to keep paying the mortgage and you request them to reduce the charges or change the conditions.

    Good luck

    @Sally332 wrote:

    I have aproperty in spain which i am struggling to pay for. I bought it as an investment but the mortgage has gone up and i have tenants who are not paying. So ive ended up having to pay all the mortgage myself, which i am struggling with. Now the property is in negative equity. Turned out not to be a good investment after all! I bet there are plenty of other people in the same boat as me, some consolation i guess;-{
    Ive tried to get the mortgage company to change the mortgage to interest only but to no avail and i have solicitors on the case with regards to the tenants, but nothin seems to be working and i can’t see a way out of this mess.
    Im wondering whether if i made a spanish limited company and put the mortgage and property into it would i still be financially liable for the mortgage if i was then unable to meet the payments?
    I’m not that keen on being chased into the uk if i default on the mortgage.

    Can anyone help?

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