# Leaving behind a mortgage in the UK



## Moving out (Jun 2, 2016)

Hi 

I wondered if anyone can advise. I am relocating to Spain in the coming months and have a mortgage that is so far in negative equity it is impossible to do anything with. The house can't be rented out as the mortgage company won't allow it and due to some hard times, I just cannot afford to pay it off. 

Is there any way around this or has anyone any experience of literally handing the keys back and leaving? I know this is the best thing to do but I don't know of any other option. The House is around £30,000 below the original price with a £25,000 secured loan on it as well for improvements when we initially bought. 

Any suggestions or ideas? 

Thanks


----------



## The Skipper (Nov 26, 2014)

Moving out said:


> Hi
> 
> I wondered if anyone can advise. I am relocating to Spain in the coming months and have a mortgage that is so far in negative equity it is impossible to do anything with. The house can't be rented out as the mortgage company won't allow it and due to some hard times, I just cannot afford to pay it off.
> 
> ...


I can't imagine how you plan to survive in Spain if your financial situation is so dire! If you are below retirement age, before you can be granted residence here you will need to show that you have sufficient means to support yourself in Spain without being a burden on the State and this will also mean taking out private medical insurance. Unless, of course, you already have a job lined up over here? If you haven't, you should be aware that Spain has a very high unemployment rate - one of the worst in Europe! Perhaps you would be better off trying to negotiate extended terms with your bank and sorting out your finances in the UK before thinking of moving to another country?


----------



## labob (Dec 2, 2014)

I would ask this on the moneysavingexpert.com forums. They'll probably be able to offer more help.

Good luck.


----------



## Moving out (Jun 2, 2016)

Thank you both for reply. 

My situation is, is that I am self employed and will continue to run by business from Spain in the UK. 99.9% of my work is all online based so is easily figured out. 

I will check on moneysavingexpert, thanks so much, never thought of there


----------



## xabiaxica (Jun 23, 2009)

Moving out said:


> Thank you both for reply.
> 
> My situation is, is that I am self employed and will continue to run by business from Spain in the UK. 99.9% of my work is all online based so is easily figured out.
> 
> I will check on moneysavingexpert, thanks so much, never thought of there


:welcome:

I'm not sure if you realise how expensive it is to be self-employed in Spain. After a start-up discount for 18 months, you will have to pay a minimum of 260€ a month in social security (autónomo) payments plus income tax. Regardless of your income. Tax is higher here too.

Work that into your calculations & it might not actually be as cheap as you think to live in Spain.

I put aside the first 1000€ of my income every month to cover my gestor, social security & tax payments. And I'm far from being a high earner!


----------



## Moving out (Jun 2, 2016)

xabiachica said:


> :welcome:
> 
> I'm not sure if you realise how expensive it is to be self-employed in Spain. After a start-up discount for 18 months, you will have to pay a minimum of 260€ a month in social security (autónomo) payments plus income tax. Regardless of your income. Tax is higher here too.
> 
> ...


Oh wow! I wasn't aware of this, we have done things a little 'arse about face' I think and initially looked for a property, then looking into the 'this and thats' of things. But yes, you're right, we wouldn't really be in a better position. 

We found a very low cost budget property of just 380 euro (so you can imagine, it's not exactly flash) with a view to this saving us some money to get ourselves in a better position

I think maybe we have to rethink things. If I am doing no business in Spain, all UK, would the same revenue system work? I presume it likely would


----------



## xabiaxica (Jun 23, 2009)

Moving out said:


> Oh wow! I wasn't aware of this, we have done things a little 'arse about face' I think and initially looked for a property, then looking into the 'this and thats' of things. But yes, you're right, we wouldn't really be in a better position.
> 
> We found a very low cost budget property of just 380 euro (so you can imagine, it's not exactly flash) with a view to this saving us some money to get ourselves in a better position
> 
> I think maybe we have to rethink things. If I am doing no business in Spain, all UK, would the same revenue system work? I presume it likely would


Yes it would. It's where you are when you do the work that matters - not where the clients are.


----------



## Moving out (Jun 2, 2016)

xabiachica said:


> Yes it would. It's where you are when you do the work that matters - not where the clients are.


Arrr, makes sense. Thank you for confirming that. Seems my 'friends' have made it sound a heck of a lot easier and cheaper than it really is. 

That will teach me to look before I leap


----------



## mrypg9 (Apr 26, 2008)

If you owe money, be sure the lender will try to get their repayment. No way can you just hand over the keys and move to Spain.
The lender, bank, mortgage company, whatever, will take court action against you to recover the debt. They will trace you to Spain. It's easy nowadays. Banks, credit card agencies, all communicate with each other.
My advice for what it's worth would be to declare bankruptcy in the UK and negotiate IVAs with your creditors.
Then you can make a new start wherever.


----------



## Moving out (Jun 2, 2016)

mrypg9 said:


> If you owe money, be sure the lender will try to get their repayment. No way can you just hand over the keys and move to Spain.
> The lender, bank, mortgage company, whatever, will take court action against you to recover the debt. They will trace you to Spain. It's easy nowadays. Banks, credit card agencies, all communicate with each other.
> My advice for what it's worth would be to declare bankruptcy in the UK and negotiate IVAs with your creditors.
> Then you can make a new start wherever.


Thank you for reply. Yes, I do wonder if this would be the better option. How would bankrupcy effect entry into Spain or renting a property etc - would it affect over there?


----------



## mono (Jan 22, 2016)

I agree. You need to go to the FREE local authority money advisers. They will help you start the process. You need to be equipped with your income, outgoings, debts, arrears etc. They will hand walk you through the process to insolvency. The bankruptcy/insolvency folk will deal with all your creditors/mortgage company etc. They will also decide from your outgoings and income whether you can afford to pay a set amount to them each month for three years.
You will not be allowed to have credit cards, store cards etc unless you are given permission for work purposes.
This does not mean that you will not be able to start a new life in Spain. But they will want a reccie of all your income, outgoings and bank statement every six months.
Yoou wiill not be allowed to accumulate any debt.
It will affect your credit status severely for a few years.
You won't be allowed certain jobs eg dealing with accounts etc without their permission.
You have to follow all their rules.
You need to think carefully about all this.
Then if you still feel this is the way to leave the past behind, the sooner you make that call the better because it ciould take a number of weeks to go through the process with lots of form-filling etc.


----------



## mrypg9 (Apr 26, 2008)

Moving out said:


> Thank you for reply. Yes, I do wonder if this would be the better option. How would bankrupcy effect entry into Spain or renting a property etc - would it affect over there?


A UK bankruptcy shouldn't affect you registering as resident in Spain. But there are requirements....you need to show a regular monthly income of around 600 euros per person including children paid into a Spanish account, so family of three 1800 euros a month. You may also be required to prove savings of around 6000 euros.
You also have to prove you have adequate provision for private health cover until you have paid regularly into the Spanish system.

As for the mortgage debt...the bank will take court action to repossess the property and will sell it. The proceeds will be deducted from the outstanding total amount owed.
If you decide to file for bankruptcy these repayments will be restructured to fit your circumstances. 
You do need to get urgent professional advice...
Good luck


----------



## mrypg9 (Apr 26, 2008)

It's a very simple process these days to get international credit references...a quick touch of the keypad...
A few years back I needed a fairly small loan to top up the money needed to buy a property in Canada...the Canadian lending back credit checked me in seconds...
There was a slight problem as I had 'defaulted' on a payment to Next Directory...something like £29.99. Actually I hadn't defaulted, it was to do with goods I'd sent back but hadn't been received by Next when the statement was issued and of course I hadn't paid for them.
I had to explain all this..all to borrow a few thousand dollars for a short period...


----------



## xgarb (May 6, 2011)

If you are still paying the mortgage and you are in a reasonable financial position can you not just change to a longer payment mortgage that allows renting?

Then very carefully choose some tenants to help pay the mortgage?


----------



## mrypg9 (Apr 26, 2008)

xgarb said:


> If you are still paying the mortgage and you are in a reasonable financial position can you not just change to a longer payment mortgage that allows renting?
> 
> Then very carefully choose some tenants to help pay the mortgage?


The OP told us that the agreement states he cannot rent the premises. Depending on the type of house and location, rent received after tax has been paid may well be insufficient to meet mortgage repayments, insurances, maintenance etc.
It is, generally speaking, not a good idea to ignore the terms of an agreement.


----------



## Williams2 (Sep 15, 2013)

mono said:


> I agree. You need to go to the FREE local authority money advisers. They will help you start the process. You need to be equipped with your income, outgoings, debts, arrears etc. They will hand walk you through the process to insolvency. The bankruptcy/insolvency folk will deal with all your creditors/mortgage company etc. They will also decide from your outgoings and income whether you can afford to pay a set amount to them each month for three years.
> You will not be allowed to have credit cards, store cards etc unless you are given permission for work purposes.
> This does not mean that you will not be able to start a new life in Spain. But they will want a reccie of all your income, outgoings and bank statement every six months.
> Yoou wiill not be allowed to accumulate any debt.
> ...


Before doing the above - I would think long and hard before taking the bankruptcy / insolvency route - therefore
exhaust all your other options first, namely selling off your possessions, anything of intrinsic value or knocking on the
door of the bank of mom and dad.

The reason I say this is that a CCJ - A County Court Judgment on bankruptcy will go against you, with all the
Credit Reference Agencies and therefore make it extremely difficult to open an account, apply for a credit card
or a mortgage in the future.

It will also severely limit your job prospects - particularly those jobs where the job offer is conditional on satisfactory
references, including background checking and vetting.
Also many of the British Jobs for British workers that have - must be eligible to be passed for SC Security clearance,
stamped all over it !! Will be denied to you - if you have a CCJ on your record. 

Anyway think long and hard about it and as always seek good advice.


----------



## bob_bob (Jan 5, 2011)

I mentioned in another thread the fact you can have a pay as you go Visa card which will be accepted so long as you have money to 'load' onto it.

IF, you go bankrupt the letters/visits/phone calls will stop, it will give you some breathing space. Its not ideal so think it through carefully before you jump.


----------

