Spanish Mortgage Guarantee Insurance

[LCog]

When we took out our Spanish mortgage we had to take out a mortgage guarantee insurance which is EU 1300 yearly.
Our in laws who purchased at the same time and in the same block with the same bank, solicitor etc... did not have to do this.
We were told that we could cancel this after a year but we are now being told that as long as we have their mortgage we have to keep this!!

As you can appreciate this is an awful lot of money each year. We are both employed - my husband has had his own business for over 20 years so cannot understand why we need to have this when our inlaws do not??

Any clarification would be good as the language is a definite barrier! If we do have to have this then could we arrange to have it reduced somehow?

[sharonw]

Hi LCog,

Unfortunately banks are very inflexible about this type of thing and sadly it is very easy for them to tell you it can be canceled after the first year only for it not to be the case. Banks normally, from the outset stipulate that if you want their mortgage you will have to take all the additional products, mortgage protection, life insurance to name the main bugbears. I can only assume the reason behind your inlaws not being required to take this insurance is possibly down to age?

The most important thing is to check your mortgage conditions in the deed (copia simple) and if this insurance is mentioned then I am afraid it is with you for the duration; if it is not then they really cannot force you to continue with it.

You could look at changing lender, to a bank that does not have this requirement (there are a few around) and normal remortgaging costs are approx 5% - however depending on your criteria it need not be a costly exercise.

Hope above helps,

Kind Regards
Sharon

[LCog]

Thankyou Sharon. I will take your advice and look into the possibility of changing a lender (and maybe see if the threat of this makes a difference, however I doubt it.)
Thanks Again !

[Mekon]

Go over the T's & C's again in detail. If you believe that you have been mis-sold something, or that the smallprint doesn't bear out what you are being told then speak to bank's customer services section at head office. If that doesn't get you any joy threaten to speak to their Defensor about the issue.

[LCog]

Sorry if I am being thick, but what is a 'defensor' and how would I go about doing this ?

[MikeF]

I find it very strange that you are paying an annual fee for Mortgage Guarantee Inurance. In the UK, I cannot comment about Spain, this type of insurance was mandatory in cases of high LTVs Loan to Value. If a person could not afford a deposit or very little deposit, the lender would need some form of comfort should the client default of payment and the lender have to repossess and sell the property. So in cases of say 80-100% mortgages, the guarantee insurance would be a requirement of the lender. This in the UK was. Single premium policy paid at the outset by the lender and either a single premium from the client, or the cost added to the mortgage and normally included with the interest charges. It could be that in Spain a separate annual payment is made to cover the cost... You need to review your paperwork or ask your lender to send you a copy of what was agreed.

You parents may have offered a larger deposit to the lender thereby not needing a mortgage indemnity policy.

Hope this helps

MikeF

[LCog]

Thanks Mike, I will speak with the In Laws and see if our deposits were similar.

[Mekon]

Sorry if I am being thick, but what is a 'defensor' and how would I go about doing this ?

Sorry LCog, only just seen your 'Defensor' question.

- Basically, if you look either on your mortgage paperwork or on the website of your Bank, the contact details of their defensor should be shown. The Defensor is an independant body who arbitrates between a bank and their clients, and each Bank must have their own defensor. If you have a problem you should write to them (in Spanish) to advise them of your complaint.

[admin]

LCog : You may find this Guide helpful with regards to your 'Defensor' question > http://www.tumbit.com/how-to-guides/articles/163-how-and-where-to-complain-about-my-bank-in-spain.html, however, I would urge you to read the small print beforehand to ensure that the situation is not as a result of a misunderstanding on your part.

[LCog]

Thanks to all, very useful info.