Dear readers, we highly recommend you review the interests on the mortgage loan that you are currently paying, and compare it with the interest that you paid before. If you are not currently paying a lot less interest than before, you may be affected by the clause known as mortgage floor or minimum interest rate.
As explained before, the mortgage floor or minimum interest clause, has as a consequence that although the reference interest rate of your loan (usually Euribor) falls, the payable interest by you never lowers, as the bank has set a minimum % to be paid.
For example, if it is agreed with the bank to pay an interest of EURIBOR + 1%, but on the Deed of the loan, normally without the knowledge of the consumer, the bank established that in any case, the final interest to be paid could never be less than 3.5 %.
Therefore, although interest should be EURIBOR (now set in 0.04%) + 1%, that means 1.04%, always you the consumer will pay a minimum of 3.5%, since this floor or minimum interest clause prevents the consumer from benefiting from the decreases in the reference interest rate of the loan.
Given that these floor clauses are very high, and today the usual interests rate of reference (especially EURIBOR) are very low, even negative, it is essential that everyone who has a mortgage loan, review and confirm whether they are affected by a floor clause, since it is estimated that there are thousands of affected consumer in Spain, the expatriate community being especially vulnerable due to the language barrier.
The difference between the interest that should be paid and the one actually paid, could mean consumers overpay thousands of euros per year, and if we consider all the years of the mortgage, the damage to the affected would mean many thousands of euros.
The Supreme Court’s rulings numbers 241/2013 and 139/2015, said that usually these clauses are null and void because the apparently variable interest rate loan becomes instead a fixed or minimum interest loan, and the banks have not clearly explained this at the time of making the contract with the consumers, together with all the consequences and possible harm that these clauses could cause.
So, You should review your mortgage loan deed and your last receipt, and check whether the interest you are paying corresponds to the one agreed at the time. If it is contrary, see if there is any minimum interest rate affecting you. There are thousands of victims who are overpaying thousands of euros in interest every year without knowing it. If you do not know if you are affected or not, send us an e-mail with a copy of your mortgage loan deed and your last receipt, and we will inform you without any commitment. Contact Us.
The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.
Carlos Baos (Lawyer)
Spanish Law firm solicitor attorney barrister.
Alicante, Denia, Costa Blanca Marina Alta
White & Baos 2016 – All rights reserved
