The best mortgage on the market at the moment, from Bankinter to Euribor + 1.95%, includes the payment in its deeds. Isn’t it funny that it isn’t much more expensive than its competitors? Personally, I have never defended, however, the generalized payment dation.
What I think is necessary is to introduce it as a measure in the hands of the judge or arbitrator, along with others such as withdrawals, deficiencies, interest rate reductions or extensions of time limits, within a special procedure for bankruptcy of natural persons.
Study of the value of homes and mortgages
According to their data, there are more than 581,000 properties whose outstanding debt exceeds its value. They comment that “ Currently, one in 10 mortgaged in Spain is trapped in a home that is worth less than the loan that remains to be paid (9.5%), a rate that will rise to 10.7% in 2014 and the 11.3% in 2015 «.
The report tells us that the average housing price of the maximums from 2007 to 2013 has fallen by 38.5%, from 245,313 to 150,787 euros.
Suppose we take out a mortgage loan for 100% of the price of the house, a very common practice in 2007 (and up to 100% more expenses in many cases). The house was valued at 245,000 euros, which means having requested a loan of about 245,000 euros.
Let’s take a 30-year mortgage at euribor + 1, contracted on January 1, 2007. Using the simulator of the Bank of Spain and the values of the euribor in December 2006, 2007, 2008, 2009, 2010, 2011 and 2012 (reference for calculate the quota throughout 2013), we find that the outstanding debt goes from 245,000 euros to:
Therefore, from the beginning of 2007 to the end of 2013, we have amortized 33,819 euros, the remaining payments being on account of interest.
Our home, on the other hand, has gone from worth 245,000 euros to 150,675 euros.
Therefore, we owe 56,839 euros more to the bank than our house is worth (if we can sell it). With a dation in payment, we would stop losing 56,389 euros plus the interest we will pay until the end of the mortgage. Of course, everything would depend on the fact that we could buy another house reduced to the same level and with a mortgage of the same conditions, which is a lot to assume.
A theoretical exercise that is of no use to the mortgaged
Given that he cannot give his dwelling in dation nor could he borrow again to buy another. But for one thing the study does:
For us to realize that houses do not always rise in value or are a safe value. The hiring of a mortgage loan is a crucial and very risky financial decision (we commit all our present and future assets), and we also risk with the value of the asset we buy, which can lose market price.
I leave you linked to the mortgage guide 2014 edited by Good Finance, which I have directed. It is, without a doubt, the minimum information that any family must have before considering requesting financing. You are notified.
I leave you an interview this morning at RNE 5 Illes Balears, on this same topic, in Catalan: