Spanish Mis-Sold Mortgage Claims

The ‘Floor Clause’ (known as ‘Cláusula Suelo’ in Spanish) is a feature of some mortgage agreements which affects the payable interest rate. Some Spanish banks inserted this into their contracts but didn’t properly explain what it meant for the customer, leaving them to pay higher interest rates.

Many banks set a ‘floor’ of 3% to 4% or even higher, meaning that even when the Euribor (Euro Interbank Offered Rate) dropped, the interest on the customer’s mortgage repayments didn’t. Even if the Euribor sank into the negatives, they would still be paying at least 4% under the ‘Floor Clause’.

As many mortgages are supposed to be ‘variable’, meaning that their interest rate fluctuates with reference to a valid financial institution such as the Euribor, it seems ludicrous that customers had to continue paying higher rates while real-life rates were dropping. This was the case for many expats and holiday home owners in particular, who were taken advantage of due to the language barrier.

As you can imagine, the difference in interest rates could add up to thousands of Euros over the years. Thanks to the decisions of the European Court of Justice, those affected by these abusive contracts are entitled to claim their overpayments back with full retroactivity and no time limit.

Mis-selling a mortgage can happen to anyone at any time, in a variety of ways. However, only certain circumstances are credible for a Spanish mis-sold mortgage claim. If you purchased a property using a Spanish mortgage but the bank explained to you what the ‘interest rate floor’ meant at the time, then you cannot claim back interest payments that you knowingly agreed to.

If such a clause was buried in the small print and not fully disclosed, then it’s likely that you can make a valid compensation claim. This doesn’t just apply to the ‘Floor Clause’ – if you overpaid anything due to misinformation from the bank or another agency, it may be a mis-sold policy.

As we’ve mentioned above, it can be a stressful, time-consuming, and expensive process to pursue a claim that doesn’t pay out, so it’s not worth jumping in head-first and hoping you’ll win. You need a team of expert Spanish lawyers on your side – so don’t hesitate to contact us if you’d like our help.

Any person who took out a Spanish mortgage to buy a property in Spain for personal use, and paid the lender more than they should have as a result of being mis-sold a policy they weren’t properly informed about, should be able to make a Spanish mis-sold mortgage claim. It doesn’t matter if you have since paid the mortgage off in full – the lender may still owe you for whatever you overpaid.

Similarly, you can still make a claim if you’ve sold the property on to someone else. You can still claim for interest overpayments, or overpayments of other kinds, during your time as the property owner and mortgage holder. If you were a joint property owner, both people may be entitled to a portion of the compensation – even if you were a married couple that has since gotten divorced.

While there was originally a time limit on qualifying mis-sold mortgages and a deadline for Spanish mis-sold mortgage claims, the 2016 ruling cancelled these limitations. Whether the mortgage is active or closed, you still live there or don’t own the property anymore, you’re entitled to claim your money back if you have supporting documentation to prove you paid more than you should have.

If you are eligible to claim compensation, the amount that your Spanish mortgage provider owes you will vary depending on your circumstances. As a minimum, you should be entitled to the difference between the amount you paid and the correct interest rate that you should’ve been charged, dating from the start of your contract to its end (or the date of your complaint/claim, if the mortgage is still ongoing). The factors that can affect Spanish mortgage compensation include:

• ⦿ When you originally took out your mortgage
• ⦿ The amount of the mortgage loan (percentage of property value)
• ⦿ Which bank or lender provided the mortgage
• ⦿ The level of the interest rate floor (if this clause is applicable)
• ⦿ How long you were overpaying for and by how much

You can also claim compensatory interest on top of this amount – the interest that your money would have earned in the time since making those overpayments. Depending on the strength of your case, you could also request compensation to cover costs such as agency and solicitor fees and mortgage related expenses (such as the costs of procuring copies of supporting documentation).