Mortgage Help for Borrowers in Spain

If you own a home in Tenerife and you are having problems repaying your mortgage, then you may qualify for a moratorium on your mortgage payments under a Spain wide government scheme.  The measures, designed to help homeowners, allow for the deferment of mortgage payments, reducing their monthly costs by up to 500 Euros.  6,000 million Euros have been made available for this scheme, part of Zapatero’s multi-billion Euro credit crunch busting programme.

This innovative form of mortgage assistance may be of great benefit to some of those residents in Tenerife that are struggling to repay their loans.

Who qualifies?

The scheme runs until December 2010.  In order to qualify for a moratorium on your mortgage repayments, you will need to meet the following criteria:
•    The mortgage should not be in arrears
•    You purchased your property in Tenerife before 1st September 2008
•    Your initial mortgage was less than 170,000 Euros
•    You are a worker in a legal situation of unemployment during the three months immediately preceding the application, and be entitled to unemployment benefits, contributory or non-contributory.
•    Your are a self-employed person who has been forced to cease its business for 3 months.
•    You are a self-employed person certifying an income of less than three times the IPREM monthly indicator for at least three months.
•    You are a retired widow's where death occurred after September 1, 2008.

Documents Required

•  A baja certificate issued by the Public Employment Service confirming that you are unemployed
•  If you are ceasing trading as a self-employed individual, you will need a baja from the Agencia Estatal de Administración Tributaria – also known as the Hacienda or taxman.
•  If you are self-employed with an income less than three times the monthly IPREM, you will need a copy of your declaration to the Agencia Estatal de Administración Tributaria
•  In the case of widowhood, by certificate issued by the appropriate agency for Social Security.

Terms and conditions

•    From March 1st 2009,mortgage holders who qualify will be able to repay only half of their monthly mortgage repayments, and defer the other half. 
•    You can defer up to €500 for a maximum of 24 monthly mortgage repayments (or two years), between 1st March 2009 and February 28, 2011.  So the total maximum amount that can be deferred is 12,000 Euros.
•    You will begin to repay that default amount on 1st March 2012, and you can choose terms of 3, 5, 7, 10 or 15 years to repay the full amount.
•    Interest is a variable rate set at 0.8% above the ICO reference
•    There are no fees for early cancellation
•    The Bank may not ask for any guarantees or security on this loan

Applying

The Instituto de Crédito Oficial (ICO) will be working with banks to set up agreements.  If you wish to apply for this scheme, you should do so through your bank.