November 11, 2011 at 3:39 pm #56411
I’m trying to suss out just what our lovely (!) bank has done. Can anyone in the know shed some light?
Basically in August 2009 our solicitor (family member) and my parents in law (as forced guarantors to the mortgage) went with the bank manager to extend the term of the mortgage.
We had taken out the (I feel like weeping when reminded of it but….) mortgage with CajaMurcia in 2006 for 30 years.
We were living in the UK and asked them to up it to 40 years. Yes the bank manager said until at the notary he apparently said it could only be upped to 30 years ago, so we got 3 years extra.
The first start date is 2006 and to finish paying in 2036, 30 years.
If it was upped from the signature on 28th August 2009 to finish on 2039 we should now be paying for another 28 years? I’ve been asking and asking why we don’t pay the amount I think we should and they come up with endless reasons why, basically saying that I don’t understand their system.
All paperwork and the amount we pay suggests we have 24 years and 9 months left to pay. I am convinced that the bank manager didn’t change the mortgage in 2009 and kept on trying to cover up. He’s now taken early retirement (!) and a new lady, a bit of a battleaxe, is the CajaGranada and CajaMurcia boss in the local branch.
She virtually threw the paperwork at me showing that in July 2009 we paid 706 euros per month, 143euros capital and 562 euros interest. Then in August it went down to 493 euros per month (244 capital and 249 interest). I argued that the mortgage is the Euribor plus 1% and going by the euribor rates of 5.9% for August 2008 to August 2009 and then dropping August 2009 to 2.6% then that explains the drop in the monthly cuota. So the interest dropping from 5.9% to 2.6% could have had the 212 euros per cuota affect?
Also, it shows that the cuota changed on day 1 rather than the paperwork which was signed at the notary on the 28th August. I can’t see where there is a difference or benefit from the signing at the notary to add years. The interest rate drop is the reason we paid less during that time?
Another lady at the branch, who actually seems a bit more switched on, wants to investigate the ‘carencia’ during that time. She says that we paid less monthly due to the signing rather than extending the mortgage term. Even though the paperwork in the yellow and blue folder from the notary says ‘Escritura publica de alteraction de plazo de prestamo’. And we thought adding the years to the term would lower the term.
If my workings out are right, they didn’t change it at the bank or on the system and that is why we are paying 523 euros per month, the exact same amount as their ‘simulador’ online shows for the captital, interest and same term. They didn’t change it on their system and we’ve been paying more than we should have done for 27 months??!!
If we’ve been paying more than we thought we should have been paying due to the bank manager not changing the deed info on their system can we get that money back, it should be a little over 1000 euros. Can we ask them to up the term now with the previous signing of 2009 (as my mother in law sadly died recently and my father in law won’t sign another piece of paper with our bank). We owe 3 months of mortgage so to clear 1000 euros stops them hounding us!! If it is their fault what are our rights? Does anyone know?
So, if the bank didn’t up the mortgage term as per the signing at the notary what rights do we have, what options? The bank just want us to sign up to another mortgage option with a lesser amount to pay each month at 5.5% over 3 years and fees of 1200 euros (which we obviously don’t have otherwise we’d be using that money to pay the mortage we owe them!!). Then they want us to have a minimum rate of interest rather than our 1% over the Euribor.
They are really quite aggresive with me and I go by myself to try to find out what has happened as I don’t want my spanish husband to start a fight in the bank.
What can we do???
November 11, 2011 at 7:18 pm #106477
The above is a little difficult to follow, so I can’t give you an exact answer, in addition you haven’t provided enough information.
I assume you are on an annual resetting mortgage, one where the interest rate changes each year, so your payment is fixed for a year.
What I need is
1) The amount of the mortgage outstanding when the interest rate changed.
2) What the new interest rate was at this change
3) How many months left at this change.
But in all honesty changing a mortgage that has 27 years left to run back to 30 years will make very little difference in the monthly mortgage payment. Also the bank would charge for this change to the mortgage and the fees would outweigh any benefit by a considerable amount. Faced with extending by only 3 years you should not have extended (unless the bank has done this totally for free).
Anyway working backwards from the info you have provided:-
For July 2009 (assumed payment made on the 1st July), based on the interest rate (5.9%) and the interest paid 562 Euros, you had an outstanding mortgage of 114,305 Euros on the 1st June 2009
Since you also made a capital payment in this July payment then on the 1st July you then owed (114,305 – 143) 114,162 Euros.
But if I try to calculate what the term was at this point the calculation doesn’t make sense, so I suspect that you have provided incorrect info.
For example if you did owe 114,305 on 1st June 2009 and the interest rate was 5.9% (you mention Eurbor in your post, what you should state is the actual rate applied) then based on a payment of 706 Euros your mortgage term left in July 2009 is 32 years!!! But at this point you have not made a change yet and the term should be around 27 years and a few months!!!
So either the interest rate is incorrect or the figures of “in July 2009 we paid 706 euros per month, 143euros capital and 562 euros interest” are incorrect.
So to make any sense of this you need to be precise and provide more info more accurately.
So taking the July 2009 case the following
1) Amount of mortgage outstanding 1 June 2009
2) interest rate
3) payment date 1st July or 31st July
4) In the case of payment at end of month then the info in 1 above if for 1 July 2009 and not June
November 11, 2011 at 7:32 pm #106478
Hang on, I made a mistake I had a 30 year mortgage in my head as being 300 months!!!
25 years is the standard term which is 300 months.
I’ll post an update in a few moments.
November 11, 2011 at 8:16 pm #106479
The calculations seems to make sense now.
1st June 2009 you had exactly 27 years 1 month (325 months left to run on the mortgage).
Because you have not provided accurate figures, eg interest rate to 2 or 3 decimal places, number of cents in addition to the 706 Euros, it might be that 1st June 2009 you had 324 months of the mortgage left which would not make sense as the mortgage resets in August. (325 months give a payment of 705.24, 324 months gives a payment of 706.13 and as you can see 324 months is closer to 706).
So an interest rate change (that is seen in the August payment) actually was applied from 1st July
So new payment in August, based on
1st July Mortgage outstanding = 114,162 Euros
Interest rate 2.6% (applied from 1st July)
is 490.75 Euros.
Again small error is due to your rough figures.
So the answer is YES. If you paid 493 Euros for the period August 2009 – July 2010 then the extension of an additional 3 years has NOT been applied.
If it was then you should have paid around 457 Euros for the above period
November 14, 2011 at 10:04 pm #106519
Thank you so so much for your detailed reply. I haven’t got the exact figures to hand but will update them soon. I am convinced the bank didn’t update the mortgage after the notary signing and we have been paying more than we should have done.
November 15, 2011 at 12:40 pm #106526
Sorry if this is a bit messy but i’ve got the paperwork balanced infront of me.
It is paperwork signed and dated 28th August 2009 with the note in the clauses as ‘ampliacion de plazo de prestamo hipotecario y modificacion de condiciones financieras’
The full mortgage amount is 120,000 euros which at the point of signing was stated in the paperwork as 114,463,64 euros. We don’t have a minimum limit for the interest rate (which seems to enfuriate the new CajaGranada manager who’s taken over the CajaMurcia job as well). The mortgage is 1% over Euribor rate.
First payment 1st September 2009 and last to be 1st August 2039 with the amount each month of 460,16 euros to begin with.
1st July 2008 we paid 672,57 euros month (150,05 capital and 513,19 interest plus 9,02 demora)
1st August 2008 we paid 706,37 (135,86 capital and 570,20 interest)
1st July 2009 we paid 706,38 (143,37 capital and 562,69 interest)
1st August we paid more due to late payments but;
1st December 2009 we paid 493,99 (244,31 capital and 249,30 interest) the amount is lower than the previous because of the much lower Euribor rate during this time?
I’ve taken the Euribor rate from a website from May of each year which takes effect in August payments and added 1% as I assume it should be for the mortgage.
May 2008 was 4,994% so we would pay 5,994%
May 2009 was 1,644% so we would pay 2,644%
I am assuming i’ve got these rates correct as I can’t see this on the bank website going back more than a year for their rates. Therefore I reckon that the 3,35% difference in the yearly interest explains why we paid less and NOT because they changed the mortgage after the 28th of August.
On their simulator if I put in total of 108,532 euros with 3.126% interest (for this year) and 24.9 years left to pay it comes out as 523,20 euros. We actually pay 523,27 euros each month now.
If we had 28 years to pay it shows as 108,532 capital, 3.126% interest and 28 years as 485,13 euros cuota to pay per month.
The ex bank manager told me every time I asked him that the internet simulator is for first time mortgages and doesn’t work out the ‘carencia’ as ours would. ???? Even when he tried to push us into their new idea of 40/60% and pay 5.5% on a lesser cuota each month but would pay 1200 euros of fees and then after three years of lower amounts we we have paid 6,823,78 euros to add 4,000 euros to the mortage (um, no thanks we said…..). That paperwork showed the end date of the mortgage of 2036, 30 years since 2006 not 2009.
It is the same bank manager who said that interest only options don’t exist in Spain (even though friends with other banks have been given that option).
It is though they are so furious that I dare to question them….but why not, we are struggling to pay this mortgage, we have asked to pay interest only and they laughed in my face. I think that they should pay back the 1000 euros they’ve been overpaid and we can then pay off some of the back debt we have with them! My poor father in law is a guarantor and as we now owe 3 months mortgage they are ringing him up to 5 times a day asking when we are going to pay the mortgage. That is why I want it sorted and not them getting angry at me and telling me that i’m wasting my time. The last i heard is that they need to hear back from the archive guy in Murcia…….
They just want us to remortgage, find 1200 euros for the fees (if we had that money wouldn’t we have used it to pay our debt??!!!!) and put a new rate of interest and a minimum interest amount. They don’t want to help us at all and I just wonder why in this serious crisis they aren’t bending over backwards to help us pay them????
I think then, and can’t work it out without the exact figures either that we have been paying 27 months of overpayments because they didn’t enter the new details into the banks system to pay for a 30 year mortgage at the end of August 2009? If we have been paying close to 40 euros per month over 27 months it’s just over a thousand euros we’ve overpaid. The lovely bank manager said that there is absolutely no chance of the bank paying any money back if we’ve overpaid as we benefited from the capital reduction (!). Why can’t they admit if they’ve made a mistake and return some of our money at least?? If we make a mistake and pay late they charge us, why can’t we get some money back from them if they’ve made the error, or at least someone working in the name of their bank made the error (the bank manager who signed has taken early retirement!)
Thanks so much for all your help, we need fantastic people like you to sort out the mountain of mess so many people have in Spain. We want to stay living here (well, my husband is spanish) but we both hate this complete scamming of the system at all levels.
November 15, 2011 at 3:47 pm #106530
If your first post was difficult to follow this one is 10 times more complicated!!
Look that simulator will work at any point in the mortgage so your bank manager is wrong. It’s a standard formula known as Principal, Month, Term under excel.
It does look like from some of your info that you are indeed paying over a shorter term and not 30 years, but then it’s difficult to tell as you are guessing some info and providing data that is not relevant. Also if bank charges are being applied because of mis-payments then it’s impossible to tell.
So just answer the following question otherwise I can’t help.
1) Does your mortgage reset every 12 months. So the payments are fixed for 12 months and then a new payment schedule is applied for the next 12 months due to a change of interest during the previous 12 months
2) if the answer to the above is yes then answer the following
3) What was the date of this reset, eg when did the monthly payment last change
4) At this date what was the EXACT interest rate (This means the new interest rate NOT EURIBOR +1… Your interest rate)
5) At this date what was the EXACT mortgage outstanding.
6) At this date what was the EXACT monthly payment.
From what you have told me I am guessing this date is 1st Sepetember. So this September 2011 your payment amount would have changed. If you can provide the above I’ll look at it again.
November 18, 2011 at 2:37 pm #106570
Sorry for being so confusing, the situation is really getting us down. The bank are calling up to five times a day asking when we are going to pay our back mortgage debts (with what, the money tree on our balcony??!!). If I go to the branch to ask about this situ they say they are waiting for a guy from archives. Not really rushing to find out the truth are they?
I sent a pm with the details I have from the banks website. Is that still not enough info? If the bank have made a mistake why don’t they admit it and pay us back? Has anyone else had the same situation??
November 18, 2011 at 4:01 pm #106571
be careful, your parents in law will soon have their assets embargoed (?) as they guaranteed your loan!!!!! thousands of parents in Spain have been turfed out on the streets after “children” defaulted on their obligations….. OUCH !!! 🙁 🙁
November 18, 2011 at 9:58 pm #106575
I have read the PM and I appreciate you are getting fed up with the situation. You didn’t quite answers my questions as I posed them but I will try to answer your question. I must also add that the financial world is not my day job, but I consider myself very financially literate.
Firstly before you read any further!! It’s pretty obvious to me that your mortgage term has NOT been increased by an additional 3 years.
From the info in your posts and your PM this is what I can deduce.
1) When your mortgage reset on 1st August in 2009 this was the current situation.
— a) 1/8/2009 you owed 114,463.64 Euros. This info is absolutely correct as of the 28th August, the signing date, your paperwork states this. It’s the 1st August as this is when you made your last payment and hence your last capitial reduction payment.
— b) Your remaining term of the mortgage was exactly 27 years at this date — 1/8/2009. This info is absolutely correct.
— c) Now this is the bit where you can’t really provide an accurate value:- The interest rate used for the July 2009 payment and the August 2009 payment.
Well you have provided the interest charged for July 2009 and August 2009 (in your PM) and since we know exactly how much you owed on the 1st August 2009 we can calculate the EXACT interest rate charged by your bank for period August 2008 -July 2009 and August 2009 -July 2010. (1st July 2009 we know you owed 143.37 Euros more)
You have told me this is the payment details for the last 6 months of 2009
Interest —- Total
Then an interest charge of:-
562.69 Euros = Interest rate of 5.8844% for a outstanding mortgage of (114,463.64 +143 + 143 ) Euros
251.43 Euros = Interest rate of 2.6326 % for a outstanding mortgage of (114,463.64 + 143) Euros
This is very close to the figures you grabbed from a website in your post above. So we now know all the information accurately to calculate your new payment for 1st August 2009 when your mortgage reset. You can also add these figures into their on line simulator.
Mortgage = 114,463.64 + 143 Euros
Term = 27 years, 1 month
Interest rate = 5.8844 %
Payment = 705.99 Euros
Mortgage = 114,463.64 Euros
Term = 27 years
Interest rate = 2.636 %
Payment = 493.96 Euros
And this is the payment you have made for the entire period 1/8/2009 – 31/7/2010
So you can see that reducing to 493 Euros is simply due to the interest change and nothing more
(Error of cents is due to rounding errors etc, or small deviation in bank algorithm, daily interest, monthly interest etc used in calculation)
Now looking at the figures for this year when your mortgage reset on 1/8/2011. You have told me
Mortgage = 108,532 (But this is not clear if that’s what you owe now eg in November or at 1/8/2011!!)
Term = 25 years ( we assume they have not made a change to the term)
Interest rate = 3.126 %
Payment = 521.81 Euros
And you are actually paying 532.27
BUT if you mean 108,532 Euros is the outstanding amount now in November then on 1/8/2011 you will owe around 1000 Euros more.
So doing the calc again
Mortgage = 109,532
Term = 25 years
Interest rate = 3.126 %
Payment = 526.80 Euros
My calculated figures don’t quite match with your later ones by a few Euros, but I am sure it’s because the amount outstanding, or interest rate is out a little, but the error is not significant. I am not sure how they are handling arrears as well as they may be charging some extra interest.
In some respects the above is pretty irrelevant as you have stated on 1st August 2009 your mortgage payment reduced by more than 200 Euros even though you didn’t go through the process of changing the mortgage terms until the 28th of the month!! How does the bank explain that one!!! You can also see that the reduction is also due to the interest change only.
If on 1/8/2009 the term had changed to 30 years in addition to the lower interest rate you would have paid 460.20 Euros a month. And again you current payment would be around 479.06 Euros.
So basically you are correct no change to your mortgage ever took place.
You only need to ask your bank to explain how the 1/08/2009 payment and 1/9/2009 and indeed all other payments that year are the same when on 1/08/2009 the new mortgage terms were not in effect!!!
I must admit that if no-one in your bank can see that an error has been made especially when all the calculations show that the term is the original 30 years without modification, then maybe they should not be in the bank.
As for how do you resolve this.
1) Did you pay bank fees and notary fees for the change of mortgage terms ?
If so then you have an absolute right for the terms to be changed according to new mortgage contract.
Another way for them to see the light (lol !!!) is to get them to print out the payment schedule up until August 2039, this will show the capital payment, interest charged and outstanding mortgage etc, just as you have done for previous years. It will show the capital outstanding reducing to ZERO after 1st July 2036.
Keep us updated.
November 18, 2011 at 10:23 pm #106576
One other point I have just noticed in reading back some of your original posts, you stated that from the paperwork you have signed the following is detailed:-
Quote….”First payment 1st September 2009 and last to be 1st August 2039 with the amount each month of 460,16 euros to begin with.”
Independently I have just calculated the new payment as 460.20. (again ignore the small errors in cents)
So we all agree which is a good sign!
But they have never charged you this!!!! Yes they have added on some extra charges which they have detailed, but you sent me a PM with this in it.
Interest —- Total
So isn’t it really simple now.
1) You have paperwork to show the new payment schedule for 08/2009 – 07/2010 ie 460.16 Euros
2) You have a record to show that actually the payment taken for the period was 493.99 Euros
It’s crystal clear ( and in writing to lol!! ) that the new payment schedule based on an additional 3 years was never activated.
You have all the other arguements mentioned above in my previous posts.
In fact you have so many ways of high-lighting their incompetence and lack of financial credibility it must be like shooting ducks in a barrel.
November 19, 2011 at 7:08 pm #97748
JP1, I am impressed.
November 20, 2011 at 5:41 pm #102805
Fantastic, thank you so much for all your hard work, it’s great that you can suss out what has been turning into a mess of numbers for us.
I have thought for ages that we have been paying too much but our bank, and i’ll say it CajaMurcia, obviously have had their fingers burnt at Polaris World and don’t want to admit any other errors?
The new CajaGrandad manager who has also taken over the CajaMurcia branch couldn’t manage a hen night after ten bottles of alco pops. She’s just rude and throws paperwork around whilst telling me how i’m wasting her time and we need to remortgage.
My father in law does get called various times throughout the day by the bank and even though my mother in law died in April they actually send separate letters regarding our debt to her. Nice aren’t they. What is the situ though if my father in law has taken the option of the dole until he retires in two years and that he also has a 70k mortgage on his own flat? They can’t embargo him if first option must be his own mortgage? He’s also named guarantor on my brother in laws mortgage, which they signed before ours. Therefore I think he signed for all of this (so kindly and to help his sons) but on the fact that at that time he earnt a good wage at the time after working 29 years in a factory. If he’s now not working and has a mortgage what would happen if they chased him? We don’t want to loose the flat but if we could hand it back it might make us feel as though the weight has been lifted from our shoulders. Taking my father in law down after such a sad year isn’t something we’d even consider though.
Thank you, thank you, thank you again JP1 for all your hard work!!!!!! 😀 I’m going to ask the bank tomorrow to explain themselves.
November 29, 2011 at 6:11 pm #106788
Hi, just an update. I’ve been to our bank various times and they are still waiting for a guy in Archives to find the right piece of paper. I don’t think that they are going to find it and that is why it’s taking so long…… they didn’t change the mortgage and i’m waiting for them to apologise and repay what we’ve over paid 😆
The bank manager really wants us to remortgage and up our interest rate to 4.5%…um, no thanks…
Thanks JP1 for all your hard work again.
November 29, 2011 at 9:22 pm #106791
Dont expect an apology. The Spanish never make mistakes and it below their ego to apologise to anybody.
November 30, 2011 at 12:13 pm #106799
Today the bank manager rather nastily threatened us with court if we don’t pay money into the account. We owe 233 euros from August, then September, October, November and tomorrow December. I pointed out that if it wasn’t for the banks error we wouldn’t owe so much so shouldn’t she sort it out first before telling us how much to pay in? It’s as though she’s so fakely being nice just to try to make us do as she wants (which is to again go to the notary and remortgage, as it’s ‘only 1200 euros’ !!!!!!!!!! if we had 1200 euros we’d pay it into the account to clear our debt you stupid, incompetent xxxxxxx!!!!!! We are to blame for getting behind in our payments, so we get charged interest, they are to blame for not changing our mortgage so what do they do???????? Nothing so far……
Maybe if these ‘Cajas’ hadn’t been thinking so much in their own commission they wouldn’t have handed mortgages to every man off the street, handed them thousands in cash to buy ‘furniture’ (which swiftly left the country…..) and then they got the keys thrown back on their desks. It’s people like my husband, and his father (and others we’ve heard of), who are being hammered because they are Spanish, they live here and the banks are bullies. The Brits also get chased back home. Everyone else seems to have walked away from their debts.
Makes me so angry and really, really sad.
November 30, 2011 at 4:18 pm #106802
December 1, 2011 at 2:27 pm #106820
Thanks Mark, I never knew that any help existed….. my husband is Spanish and they are brought up with the old Franco times mentality of ‘doing as you are told’ by someone in an office. On setting up this blooming mortgage in 2006 the two bank contacts pocketed 7k each in blank cheques by signing my parents in law as ‘guarantors’ when we thought that this meant they’d be chased if we didn’t pay (as my father law is now) but not that the bank could set up a 14k loan in his name for their ‘commisions’. I won’t accept anything they say now because we’ve been stung too many times…. A solicitor at the time said that it would cost too much money finding out where ‘Fernando’ and ‘Jorge’ were and to then prove that we hadn’t given them permission to take the money (!!). Fernando apparently lives in Seville (so be careful if anyone comes into contact with a tall guy) and Jorge sells second hand cars in Puerto Lumbreras (typical….)
Thanks again, you’ve given me confidence to find out the truth so that we only pay what is right we pay.
December 1, 2011 at 9:49 pm #106831
January 10, 2012 at 6:36 pm #107475
Hello, thought i’d add an update to say that the bank manager is ‘looking into the situation’……..and that she understands it’s ‘very important’ but that ‘these things take a long time’….. Not really a surprise. I think they are playing the classic Spanish bank game of taking so long that they hope i’ll get fed up of going in to ask them about it and that we’ll just pay them. Erm, no. Even if they tell me to come in as they have ‘important news’ and make me wait for over an hour for the manager to come out of her office and show me that X has returned to the office from maternity leave. X was sat infront of me at her desk for that hour of my wasted time……
They’ve said that they’ll let me know and then we’ll go to the notary. Um, are they going to slightly admit that they made a mistake and then repay us some money whilst then hitting us with a new set of deeds with a higher interest amount? Bank Manager wasn’t very happy when I argued with her that we don’t have a minimum written into the deeds. She got out of that one by saying that she is CajaGranada and she has only just taken on the CajaMurcia side. Why would we need to go to the notary again, why can’t they just do what they should have done in 2009…..press the blooming button on their computer system!!??
There must be so many people suffering at the hands of these types at the moment…… very sad for those involved.
January 10, 2012 at 8:51 pm #107478
There must be so many people suffering at the hands of these types at the moment…… very sad for those involved.
Yes itsme. You can be sure that monumental incompetence is making life hell for many people.
January 19, 2012 at 2:29 pm #107640
I finally have some news…….
BUT, I don’t think that it’s as positive as the bank manager is trying to make me believe. She says that we are ‘in the system’ to go to court to repo the flat. Part of me says go ahead, it’ll take years but the sad thing is that my father in law is a guarantor and he has his own flat (mortgaged to 70k) and has taken early retirement (he’s 63) with the dole until he can claim his pension. What would they take from him as i’m sure his own mortgage comes before ours, and he also signed as a guarantor for my brother in law years before signing ours.
Anyway, the bank manager has offered us:
Extend the mortgage to 40 years
Borrow 6000 euros to clear our debt and pay the fees
Pay interest only for 2 years
she’s ‘guessing’ the interest rate is 3.75% for the first year
says that we’ll need a minimum interest amount (at the moment we are 1% on top of Euribor rate)
says that the fees at the notary/registry will be 2000 euros
and that we’ll need to go again to the notary
The paperwork shows going up to nearly 115,000 euros (now 108,000) starting at 371.35 euros per month interest only. At 2014 it shows that it starts with capital and interest payments of 477.31 euros per month. BUT that is her using 3.75% interest, what’s the guessing they up it to 5%?
So, my question here is:
Should we take it?
Should we try to stick with our current deal and just try and pay off the 4 months we owe, plus credit card of 600 euros
Should the bank not pay back the overpayments of the last 2 years due to it being THEIR mistake that the original paperwork wasn’t updated on their system? Even if it’s ‘just’ the interest we paid them over what we should have?
It just doesn’t sound as though they are doing us a favour in exchange for the mistake they made in 2009?
BUT, what else can we do?????
Thanks for your time….
January 20, 2012 at 3:23 pm #107660
Well I guess you can only answer that question!
What you are doing though is increasing borrowing for very little gain.
If you were to do this new deal and in 2 years the property market has turned a corner then maybe it has given you breathing space to sell your property and get out. But what do you think you could sell for in 2014 and how would this compare to your outstanding mortgage. Will the market have turned around in 2014?
Your current mortgage has no interest cap and we have just had a 0.25% reduction in the ECB bank rate, this will probably feed through to you in the Summer when your rate resets, which may be a reduction of approximately 20 Euros.
The financial facts are that you are receiving approximately a 100 Euro reduction for 2 years and then the costs revert to essentially what you are paying now. Assuming that you then sell the property in 2 years time when the interest only deal ends. Then you are worse off by
Fees for remortgaging = 2000 Euros.
Extra interest charged (by rate increasing approx 1% and 6000 increase in capital) = 2300 Euros
So I would say almost 5000 Euros worse off ( I am sure the bank will sting you for other charges on the re-mortgage)
The benefit to you is a smaller burden of a mortgage payment of 100 Euros for 24 months. But it will probably reduce by 20 Euros anyway in 6 months time, whereas your new deal payment won’t as you’ll need to wait another 6 months for that and if it’s already at the floor of 3.75% then it won’t go any lower.
THIS IS NOT ADVICE….
If I were in your situation I would set myself the mental challenge of trying to reduce my living expenses by 100 Euros a month and or increasing my incomings.
So for example if I could reduce monthly bills by 50 Euros and bring in an extra 50 Euros then I have beaten the bank and after 2 years I am better off by 5000 Euros. (Although this 5000 Euros in by way of a smaller mortgage)
But please make your own decision I have just pointed out some facts, it’s you that needs to decide what you want to do.
January 22, 2012 at 8:08 pm #107670
Thanks JP1, we’ll have a good think about how we can make some savings and try to clear our back debt and go forward positively….. Maybe we should pay them 485 euros per month as that is what we should be paying if they had changed the mortgage in 2009? I’m sure they won’t take us to court for paying that amount and it might force them to admit their error and correct it on their system?
February 22, 2012 at 8:27 pm #107982
An update but still nothing like an apology from the bank.
We’ve been paying them 485 euros a month as that is what the mortgage should be. They seem very happy that we are paying that and keep saying that they are working on our situation. The guy on the CajaGranada side actually said that he thought that we should get the excess money paid back. Maybe we are getting somewhere?
February 29, 2012 at 4:34 pm #108026
I think, that maybe they’ve paid us back!??
I’ve logged on to the online banking and I can’t access the mortgage part of it but there have been various credits made to the account with the name ‘oficina’ alongside them. I’m going in first thing tomorrow morning to double check as I really think that they’ve paid what they owe us back. Brilliant! It just shows that sitting in their office for the past four months and staying calm as they flew off the handle paid off.
phew, thanks so much JP1 for giving me the confidence to stick it out!!
I am looking forward to seeing if they’ve amended the mortgage to the correct lower amount (without any notary signing and fees…and hopefully that we still get the yearly renewal of the Euribor from May as it seems to be lowering doesn’t it?)
March 1, 2012 at 10:16 pm #108031
hold on a minute…. it’s turning into a book now.
I was told today that ‘CajaMurcia have been having technical difficulties with their systems so they can’t confirm what has happened with our account at all just yet…….’ ARRRRGHHHHHHHHHHH!!!!!!!!!!!!!!!!!
April 13, 2012 at 7:26 pm #108388
They’ve sort of apologised and paid us back!! yippeee!!! The now very nice bank manager said that it wasn’t a normal case but I guess the fact that i’ve virtually camped out infront of her office for months showed her that I was very serious about it all.
We still have 23 years to go and the monthly payment of 523 euros but it feels like we’ve won this battle. Fingers crossed the Euribor in May is really low so that will help.
April 14, 2012 at 7:27 am #103195
Congratulations! Perseverance paid off. And I agree, JP1 is a hero.
April 14, 2012 at 7:27 am #103040
Congratulations! Perseverance paid off. And I agree, JP1 is a hero.
April 15, 2012 at 6:26 pm #108412
Impressive work by jp1.
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