Editorial transparency and use of artificial intelligence
This article forms part of the CostaLuz Lawyers blog and is published for general informational and educational purposes only. It was prepared with the assistance of artificial intelligence tools and, before publication, was substantively reviewed and editorially approved by Maria de Castro, a Spanish-qualified lawyer registered with the Cádiz Bar Association under number 2745, founder of CostaLuz Lawyers and the person responsible for the editorial review of the published content.
This article does not constitute legal, tax, immigration, employment, estate-planning or investment advice and does not replace an individual assessment and the professional work of the appropriate CostaLuz Lawyers specialist. No action or omission should be based solely on this information.
The pandemic has put financial strain on almost everyone and many people are finding it difficult to meet their mortgage obligations. If you own a property in Spain with a mortgage, you may be already behind on your payments or think you could be in the near future. If this is your case, read on to discover what you should do when you can’t pay your Spanish mortgage.
Important: If your repayment problem is caused by what’s written in the deed (for example, a floor clause, IRPH, excessive fees or other unfair terms), you may also have a separate legal route to recover money — not just renegotiate payments. Start here: Spanish Mortgage Claims (2026) — recovery of abusive mortgage clauses in Spain.
Do Act Now
The moment you realise that you’re going to get behind on your Spanish mortgage payments, contact your bank. The sooner you communicate to them that you’re facing difficulties, the sooner both parties can work towards a solution.
If you need a structured options overview: See our repayment-focused guide here: Mortgage Repayment Help.
Find out more about property debt in Spain.
Don’t Leave it Too Long
The longer you leave it to contact your bank, the more expensive it will be for you. Every month that goes by represents another missed mortgage payment. And you must add penalty interest to the unpaid mortgage – in some cases, this interest rate can exceed 20%.
Did you know? You can see what the penalty interest rate is on your mortgage in your deeds.
Do Think About Renegotiating Your Mortgage
It’s important to remember that it is always in the bank’s interests for you to keep the property and continue to pay for it. Repossessions are expensive and onerous procedures for banks so they will be keen to help you get your payments back on track.
Tell your bank that you’re having difficulty making payments and ask for a meeting to discuss new terms for your Spanish mortgage. Options include an interest-free period and a longer loan term with lower monthly payments.
Make sure you fully understand all the implications of new mortgage terms including their costs.
Don’t Take Too Long to Sell
If new mortgage terms are not an option, you may wish to consider selling your property and using the proceeds to pay off your mortgage debt. Depending on market conditions in your area, you will get more or less for your property.
What Happens If the Sales Price is Less Than Your Mortgage?
Imagine a scenario in which you buy a property for €150,000 with a mortgage of €120,000, but can only sell it for €110,000. You are therefore €10,000 short of paying off your mortgage.
In this case, you need to do your Maths and work out if you can make up the shortfall by some other means. This could well be cheaper than falling further behind on your payments (with penalty interest mounting up).
Did you know? Spanish banks can pursue you for debt on a Spanish property and apply charges on your assets anywhere in the world.
Do Think About Handing the Property Back
Another option if you’re finding it difficult to pay your Spanish mortgage is to hand the property back to the bank. This process is known as dación en pago in Spanish and involves a formal procedure that you must follow.
Never be tempted to just hand over the keys to the bank. This will not release you from your mortgage obligations and could leave you with debt that the Spanish bank can and will reclaim from your other assets.
How does dación en pago work?
You must first make a formal application to the bank who will initiate legal proceedings for you to hand over the property. They include the signing of title deeds before a Notary Public as well as administrative procedures at the bank.
Once you have completed the paperwork and signed the deeds, you give the keys to your bank and are free of your mortgage obligations.
Note that if you choose the dación en pago option, the property cannot have tenants or squatters.
Struggling with mortgage repayments? Contact us today for a free, no obligations chat.
Are there other alternatives to dación en pago?
Yes, the bank may also consider the compraventa con quita option. This is a managed sale through which the bank becomes the owner of your property and you are no longer bound to the mortgage contract on it.
The compraventa con quita means the bank does not have to pay taxes on the ‘sale’ making it a cheaper option than a mortgage settlement.
Struggling with mortgage repayments? Contact us today for a free, no obligations chat.
Don’t Suffer Alone
At Costaluz Lawyers, we are pioneers in fighting for consumer rights against Spanish banks, particularly in the field of mortgages. We have years of experience in negotiations with banks and are experts in reaching the best possible solution for our clients.
Our friendly team will be more than happy to help you solve your mortgage problems in Spain. Contact us now for a free consultation so that we can work out the best solution for yours.
Related Property Buying Guides
- Buying Property in Spain — Complete Legal Guide (2026)
- Costs of Buying Property in Spain (2026)
- Transfer Tax Calculator
- Buying Off-Plan Property in Spain
- Buy Property with an Independent Lawyer
- Rental Law in Spain
Disclaimer: This information is provided for general guidance purposes only and does not constitute personalised tax or legal advice. Each case must be assessed individually according to the client’s specific circumstances. It is essential to consult a qualified specialist before taking any action or making any decision.
Legal Notice: The content on this page is provided for general informational and educational purposes only. It does not constitute legal advice and should not be relied upon as such. No action should be taken based solely on this content without first seeking independent professional legal counsel. Each case requires individual assessment based on its specific circumstances. CostaLuz Lawyers accepts no liability for actions taken or not taken based on this content.
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Related guide: our guide to mortgages in Spain for non-residents.