I can't pay the mortgage on my home, what can I do?

The effects of not paying the mortgage depend on the status of the individual's debt. In the case that the non-payment is limited to a few months, interest for late payment is provided but, on the other hand, when the period is longer, the creditor entity can foreclose the mortgage and start the liquidation process; therefore, it is very important that you take advice from a good civil lawyer.

How long can a mortgage be declared overdue if the property is not paid for?

The Spanish Mortgage Guarantee Law of 5/2019 establishes the legal minimum in which banks can declare mortgages overdue early. Under the previous law, as of 2013, mortgages could be foreclosed in at least three payments. However, the new law modifies this clause to favour the debtor.

What are the deadlines for paying the debt?

If the delay occurs in the first half of the total term of the loan, the bank will be able to sue at least the 12 months of instalments that are in arrears. But, it will also be sued if the debt reaches 3% of the loan amount. In case of non-payment in the second half of the loan term, the delay period will not be less than 15 months or 7% of the initial capital to be able to claim.

And, in the event that the debt cannot be repaid, what can be done?

It is essential to intervene before the circumstances deteriorate further and the deadline for creditor foreclosure approaches. When a debtor already knows that his debts will continue to increase, he can take one of the actions prescribed by the ordinance. And the steps his bank will take are as follows:

• The bank will charge a fee of between 30 and 70 euros when they notify the debtor of the non-payment. Most legal entities use an automated system where they invoice you as soon as the fee is issued and do not pay the corresponding amount.
• A forced auction. Immediately after applying the early repayment clause, the bank will ask the court to demand repossession of the mortgaged house or flat.

Is there a solution?

First of all what you need to do is to act before your bank gives you a receipt for the installment due. It is not recommended to have a deficit in the bank as interest will accrue on late payment charges and, in the worst case scenario, your house or flat will be foreclosed. This way, you can easily obtain multiple solutions such as reducing expenses and looking for new income, negotiating with banks, adopting a code of good conduct (deficits, interest rate reductions, debt restructuring, payment deadlines...), selling your house or flat for a price equal to or higher than your outstanding debt with the bank; this way, you can pay off your mortgage and hopefully earn some money in the process. Although it sounds obvious, before selling your house, make sure you have a viable alternative (a flat with cheap rent, a relative's or relatives' house, etc).

On the other hand, another solution could be to ask for a payment date. This solution consists of transferring your home to the person with whom you have a mortgage so that the debt is paid in full. It is true that banks rarely accept this, because they are not interested in keeping the house in stock, but in proving that there is nothing left. However, if you accept our code of conduct above and meet all their requirements, your company will have to accept it.

Is there an organisation I can turn to for help?

If you are not sure what is the best option for you or you have stopped paying your mortgage, there are some organisations that can help you free of charge. You can contact one of these organisations to find out what arrangement is best for you if you are unable to make your monthly mortgage payments.

You can also contact the Mortgage Brokerage Services in your municipality or district. In addition, the government will give you free advice and mediate with your bank to restructure your debt with a better chance of success than if you negotiate it yourself.