February 15, 2017 at 1:59 pm #195274
Hi our English son lives works and is resident in Mallorca. He has a joint mortgage and his relationship has broken down. He needs to remortgage. His bank will not accept him as sole mortgagee. We the parents have assets in the UK of approx. £1,000,000 and no debts and can pay the other partners half of mortgage. But the bank will not accept us as guarantors, as our ages are 67 and 71 respectively. The property has been valued by the bank @ 268,000 euros of which there is 170,000 outstanding. Any advice on moving forward would appreciated.
July 24, 2017 at 10:23 am #214347
You could make him a loan of the amount required secured against the property buy do it through a solicitor as there will be taxes to pay
July 30, 2017 at 12:06 pm #214535
Nothing is ever easy in Spain is it. I have recently been looking into the subject of remortgaging, increasing mortgage values and building/renovation mortgages and have been very surprised how inflexible banks in Spain are with mortgages, things that you would take for granted in the UK such as equity release, remortgaging, moving to another lender, phased fund release for building projects and buying out a joint mortgagee are either just not possible or difficult and costly.
Regarding your son buying out his ex-partner, from what I understand in addition to getting his bank to take him as the sole mortgagee he will face a number of issues. If he is able to acquire the funds to buy out his ex-partner the banks and Spanish authorities will view the transaction as a Sale, that will be subject to any capital gains tax, and a Purchase that will incur all of the normal transfer taxes, notary fees and if there is a mortgage the normal taxes associated with taking out a new mortgage. As the Spanish authorities have made it nearly impossible to change mortgage lender he will be at the mercy of his current lender who can, as they seem to be doing, be as intransigent and unhelpful as they like.
You mention that you would be able to pay the ex-partners share of the mortgage but I’m not sure whether you mean the monthly repayment or the capital sum. If it is the monthly repayment perhaps the simplest thing to do would be pay this to your son monthly so he can pay the mortgage or indeed pay it direct to the bank, I shouldn’t think the bank will care where the funds come from so long as the mortgage is paid. If you meant a capital payment you could loan this to your son and he could pay off part of the mortgage. Another angle would be to ask the bank what the maximum figure is that your sons income will support and loan him sufficient funds to reduce the mortgage to that figure. Please remember to formally document any loan, preferably with a notary, otherwise your son may well get hit with the Spanish Gift Tax.
Any of the above should resolve the financial situation, however, there would remain the ownership issues that will need to be addressed. The ex-partner may have equity in the property that they want back and the property will need to be registered in your sons name only, for this you will need legal and tax advice as well I suspect as some co-operation from the ex-partner.
Best of luck!
July 31, 2017 at 8:30 pm #214552
Good advice Macgd016. As you say, the mortgage market in Spain is pretty backward, and any solution attracts taxes and fees from the likes of notaries and registrars. Wixie are you still looking for a solution or have you solved the problem.
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