Mortgage in Spain: The controversial floor clause
Saskia Gruijters, Friday, 10 March 2017
The controversial floor clause
In the past most mortgages were taken out with a variable interest rate. The banks had set a ‘floor’ or a minimum interest rate which caused that people with a mortgage could not fully profit from the low interest rate. This floor clause (also known as tunnel clause) was not always clearly described in the mortgage deed, resulting in banks profiting for years from this abusive interest rate set by them.
People with a mortgage have therefore been paying too much interest, often for many years, and have protested against this. In December 2016 the European Court of Justice has declared that the floor clause is void and that now the Spanish banks are obliged to compensate for the excess interest paid.
It is possible that you have signed a mortgage with this floor rate and that you qualify for a compensation. Please be advised by a lawyer or by an authorised mortgage expert to check your mortgage deed and to see if you have a right to compensation. Click for more information.
The controversial floor clause
In the past most mortgages were taken out with a variable interest rate. The banks had set a ‘floor’ or a minimum interest rate which caused that people with a mortgage could not fully profit from the low interest rate. This floor clause (also known as tunnel clause) was not always clearly described in the mortgage deed, resulting in banks profiting for years from this abusive interest rate set by them.
People with a mortgage have therefore been paying too much interest, often for many years, and have protested against this. In December 2016 the European Court of Justice has declared that the floor clause is void and that now the Spanish banks are obliged to compensate for the excess interest paid.
It is possible that you have signed a mortgage with this floor rate and that you qualify for a compensation. Please be advised by a lawyer or by an authorised mortgage expert to check your mortgage deed and to see if you have a right to compensation. Click for more information.
Saskia Gruijters
Spanish property for sale. Appartements, villas and housesfor sale in Spain Costa del Sol, Costa Brava and Costa Blanca. For sale by owner and by agent.
It’s easy to fall in love with a home in Spain and then blindly sign the purchase documents. However, because legal processes may be different there,
you really do need to be on the ball when it comes to following the process through. A quick look at the buying process will stand you in good stead,
helping you know what to expect next and making the system feel a lot more manageable.