The bank extends terms, offers shortages and negotiates to avoid default
Financial institutions are massively lengthening the amortization of mortgage loans and have raised the maximum age they consider eligible to be mortgaged, up to 77 years in the case of Bankinter …, near the life expectancy of Spanish men, which according to the INE is 77.5 years. There are conditions, however, for those looking to buy a flat, which now finds few facilities in the financial sector, but for those who were mortgaged in the real estate boom and now have problems paying the installments of their loans , a segment that represents the 7.7% of Spaniards according to the same INE.
Until a few years ago, the entities matched the total amortization of the mortgage with the end of working life, in the 65 years. With the boom, and the need to finance increasingly expensive apartments, the duration of the mortgage was extended from 30 to 50 years, forcing in turn to postpone the maximum age suitable up to 70 years. Now, most entities extend the limit up to 75 and some, in the individual negotiation, already go further. When neither these new age limits are sufficient, the entities resort to other formulas, such as requesting that a child who can be below the maximum age upon cancellation of the mortgage be included as co-owner of the mortgage, says Gustavo Reguero, head of banking business. of Tecnocasa.
“The bank is looking for ways to prevent the customer from paying because he wants to avoid having to stay at all costs: that forces him to make provisions that go directly against his income statement,” says Pedro Javaloyes, spokesperson for the Negotiating Agency of Banking Products. Passing a loan of 30 years to 50 reduces the monthly payment by 23%, which for an average mortgage (of 117,000 euros, according to the INE) means a saving of 120 euros per month. This formula also has an added attraction: since the anti-crisis measures approved by the Government in 2008, there are no management costs or registration fees.
When extending the term of amortization is not enough
er formulas, like lacks in the reimbursement of the capital (that nevertheless reduce little the quota if the mortgage is recent ) or even in the payment of interest. When this is not enough, banks are accepting other options such as managing the sale of the home, “accepting even a small loss on their outstanding mortgage”, or keeping it by a dation, that is, avoiding judicial execution, a long and expensive procedure (with costs of lawyers, solicitors, etc.). According to Javaloyes, if the current value of the home exceeds the market value, banks can accept that the donation pays the debt. Otherwise, they accept the dation if the client acknowledges the remaining outstanding debt, sometimes without demanding immediate payment, while in other cases they require a soft loan, at low rates, with initial deficiency and long-term maturity, so you can pay off your debt when your situation improves.
Rubén Sánchez, the spokesperson for the consumer organization Facua, regrets that in Spain the debt is not considered settled with the allocation of the home by the bank, as in the United States. “This is the most serious problem: to be without a floor and with a huge debt. With the desperation to avoid losing the floor, in addition, people do not look at the consequences of what they sign: for example, after the lack of interest, many times a higher fee is paid to compensate “. Also lengthen the mortgage is very expensive: 20 years more, for example, can increase by 50% of the amount paid for housing finally.
While the entities show a flexibility unthinkable a few years ago with mortgages that cannot pay the installments, they are very strict at the time of giving new mortgages to buy a flat. Here, paradoxically, the maximum term offered to applicants has decreased, so that they are now hired for an average of 27 years. Gustavo Reguero, of Tecnocasa, assures that “they also finance a lower percentage of the appraised value, of around 75%, and require that the fee be less than 40% of the applicant’s income. Furthermore, they do not measure this effort at the current interest rate, historically very low, but at 5%, anticipating that the rates will surely rise. “
some elderly in Spain would like to be mortgaged: being owners of flats
that are worth a lot of money, have low pensions and few savings, but very few entities accept mortgages over 65 years. A bad credit loans same day completely online can provide funds to renovate the apartment by installing an elevator, to live more easily or to help a child with financial problems.
Part of this problem is covered by reverse mortgages, which provide monthly income to supplement the pension. To enter from a higher sum, the firm CreditServices markets a mortgage that may be valid until 90 or 95 years. Cristina Bono, national director of this network of financial intermediaries, explains that the home is required to be free of charges and that the credit does not exceed 35% or 40% of the appraisal value. The idea is that the owner of the home enjoys the credit and that his heirs pay for it, or else they subtract their amount from the income they will obtain when selling the property.