Here in Spain we don't really have much of a sub-prime mortgage market. The only loans where you can self-certificate your income have pretty low Loan-to-values, like 50% or 60%.
For the holiday apartment boom along the coastal areas, many of these units have been bought by non-residents, so the LTV's were generally not more than 70 or 80%
So anyone that has bought over the past few years of price increases, should still have a chunk of equity in the property. Even if people have a few problems making the payments, during a period of higher interest rates, then it would take a substantial fall in the market for these properties to have negative equity. That is, the loan being higher than the value.
Past history has shown us that even with negative equity, the long term prospects for property is that it increases in value. So hang in there. If you want to switch to interest-only and save a bit of cashflow, visit us at www.europamortgages.com and make an enquiry.
Friday, November 2, 2007
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