Mortgage Floor Clause
Have You Been Overcharged on Your Spanish mortgage?
Do you have a Spanish Mortgage on your property? You could be entitled to a refund of thousands of Euros.
The European Court of Justice has recently ruled that banks who sold Spanish mortgages with a floor clause or ‘Cláusula Suelo’ did so illegally and will now have to refund mortgage holders any interest they overpaid during that period.
If you or anyone you know took out a mortgage on your property which contained a floor clause (Cláusula Suelo) then you could be due to claim thousands of pounds in overpaid interest.
In May 2013, Spain’s Supreme Court ruled that mortgages of this type were “abusive” but banks were not initially ordered to refund customers. In April 2016 a Madrid judge went further and decreed that 40 of Spain’s biggest lenders had to pay back borrowers the extra interest paid on mortgages dating back to 2013.
The more recent ruling ordered that there should not be a time limit on how far back you can claim and banks should pay back all of the interest you overpaid.
What is a Mortgage Floor Clause?
Many floating rate mortgages are linked to European borrowing rates (EURIBOR). A floor clause or Cláusula Suelo is a clause which imposes a minimum interest rate on floating-rate mortgages by setting a limit on how low the rate can go. So even if the benchmark borrowing rate falls lower, the clause acts as a limit or floor. Typically this limit can be anywhere from 2.5% to 4.5% when EURIBOR has been significantly lower.
Following the financial crisis European benchmark rates have fallen and remained at record lows meaning in practice that Spanish mortgage buyers with a floor clause in their mortgage did not profit fully from the record-low interest rate environment in recent years and wound up paying thousands more in interest than they should have.
Can Anyone Claim?
Technically the clauses are not illegal as long as they were properly explained and fully transparent to the mortgage buyer so they knew that they were buying a mortgage with a rate floor. In most instances however this was not the case and the clause was not fully disclosed, especially to foreign buyers where it was very often buried in the contracts small print.
If you believe you may have had a floor clause in your mortgage and you were not made fully aware of it at the time of purchase then you should be able to claim back the full overpaid amount plus interest.
Does My Mortgage Contain a Floor Clause?
The first thing to check is whether it appears in your mortgage contract. Often it will be buried in the small print and may say something like; “limites a la aplicación del interés variable” this translates as “limits apply to the variable interest”.
Otherwise if you can’t find any indication of this in your documentation but you have been paying the same amount over a protracted period of time on your mortgage that could well mean that you have been paying a fixed rate set by a floor clause. If in doubt contact us and we can help you go through the paperwork to check the terms.
How Much Could I Claim Back?
The principal banks responsible for this mis-selling are BBVA, Banco Sabadell, Caixabank, Cajamar, Banco Popular, and Liberbank amongst others and have been forced to set aside up 4 billion euros to cover refunds and claims.
On average the clause adds an extra €3,000 a year to mortgages making the average claim €9,000 however claims could also easily be as high as €30,000. It will however vary from case to case.
What Are the Next Steps?
If you believe you have been subject to this mis-selling or you would like help going through your mortgage documentation then make sure to get in contact with us and arrange a first appointment free of charge to discuss options.
If you have been mis sold on your mortgage and would like to submit a claim then we simply require a €500 provisional down payment to arrange General Power of attorney for litigation and special power for other purposes and we can then begin processing the claim on your behalf.
We look forward to helping you claim back what is rightfully yours.