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In most Spanish mortgages, the interest rate to be paid is calculated by reference to the EURIBOR or the IRPH. If this interest rate increases, then the interest on the mortgage also increases, similarly, if it decreases, then the interest payment will decrease. This is also known as a "variable rate mortgage", since the interest to be paid on the mortgage varies with the EURIBOR or the IRPH.
However, the insertion of the Floor Clause in the mortgage contract means that the mortgage holders do not fully benefit from the fall in the interest rate, since there will be a minimum rate, or floor, of interest to be paid on the mortgage. The level of the minimum clause will depend on the bank that grants the mortgage and the date on which it was contracted, but it is common for the minimum rates to be between 3,00 and 4,00%.
This means that if you have a variable rate mortgage with EURIBOR and a floor set at 4%, when the EURIBOR falls below 4%, you end up paying 4% interest on your mortgage. As the EURIBOR is currently negative, at -0,15%, you are overpaying interest on your mortgage for the difference between the minimum rate and the current EURIBOR. Over time, this could represent thousands of additional euros in interest payments.
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New judgment of the Court of Justice of the European Communities on mortgage claims. There are many good things to say about Spain, from its climate to its fantastic food and its welcoming people. Unfortunately, its banking system and its supervisors are still in need of an upgrade. In the decade since the financial crisis, European courts have continually corrected the Spanish in their decisions on Spanish banking practices. Most of them have had to do with mortgage clauses that have later been considered illegitimate. The most famous is the floor clause or floor clause, which established a minimum interest to be paid that used to be higher than the standard EURIBOR reference index.
Del Canto Chambers has been very busy these past few decades winning cases for clients in Spain and the UK. In fact, for many British people it was an added value to hire Spanish lawyers with extensive knowledge of the local system, but who also had a base of operations in the United Kingdom.
Since it is important to follow these developments closely, here we will review the two most important updates so that borrowers can claim from Spanish banks. It will be particularly relevant to those British Spanish homeowners who may feel disconnected from the news on the continent.
For when the European court sentence clause land mortgages? on-line
In May 2013, Spain's Supreme Court ruled that mortgages of this type were "abusive", but banks were initially not ordered to pay customers back. In April 2016, a Madrid judge went further, ruling that 40 of Spain's biggest lenders had to repay borrowers extra interest paid on mortgages dating back to 2013.
Many variable rate mortgages are linked to European interest rates (EURIBOR). A floor clause or Floor Clause is a clause that imposes a minimum interest rate on variable-rate mortgages, establishing a limit on the rate drop. Thus, even if the reference interest rate falls, the clause acts as a limit or floor. Normally, this limit can range between 2,5% and 4,5% when the EURIBOR has been significantly lower.
After the financial crisis, European reference interest rates have fallen and have remained at historical lows, which means in practice that buyers of Spanish mortgages with a floor clause in their mortgage have not fully benefited from the interest rate environment lowest interest rates in recent years and have ended up paying thousands of euros more in interest than they should.
For when the European court sentence clause land mortgages? 2022
We firmly believe that most of the "threshold clauses" reflected in mortgage contracts are unfair and bank customers are harmed and penalized for their lack of financial knowledge. It is convenient to have expert lawyers help you so that they can negotiate with the bank on your behalf, and they can even sue the bank to save you money on each monthly installment, since the interest you pay is probably higher than the official interest established by the Central Bank. European. If you contact a law firm to claim your mortgage expenses, you will have the opportunity to review your deeds to make sure if there is a minimum mortgage rate. If so, you can ask the Bank to return the money it is taking from you because of that abusive clause.
