Some mortgage lenders in Spain are starting to offer clients struggling to pay the mortgage an alternative to repossession, reports the Spanish daily ‘El Pais’.

Solutions include converting to renting with an option to buy, or mortgage holidays that defer payments to a later date.

The article describes the experience of Salvador Aguado, who lost his job at the same time as his mortgage payments rose from 900 to 1,100 Euros a month.

After trying various remedies without success, the manager of his branch of Caixa Catalunya, a Spanish savings bank, offered him the option of converting his mortgage into a rental contract with monthly payments of 650 Euros.

“As I have an option to buy, even though the rent is slightly higher than market rates, I’m not throwing money away,” Aguado, who lives in Valencia, told El Pais. “Also the bank is paying the rates and community fees.”

Converting mortgages into rental contracts with the option of buying is one of the ways that Caixa Catalunya is trying to help mortgage borrowers in financial trouble. Rents are slightly below market rates, and 40% to 50% below mortgage repayments, claims the bank.

This option avoids forcing people out of their homes, whilst giving the bank some income from the loan. It also means banks avoid the costly process of foreclosure, after which they are left with an empty property to have to sell.

Other lenders are also starting to accommodate clients who are having trouble paying their mortgage, reports the article. Other solutions include extending mortgage terms, and adapting interest rates to clients’ ability to pay.