Most of the estimated 4 million mortgages affected were sold during the 1997-2007 boom when buyers were paying top prices for property. When the bubble burst they were unable to benefit from falling interest rates. Someone with a €150,000 mortgage is paying €179 to €213 more than they should.
Millions of Spanish mortgage holders, including thousands of Brits, could be due to reclaim up to €15,000 as a result of judgements passed by the European Court of Justice and the Spanish Supreme Court, which found the Spanish banks treatment of their customers was “abusive”.
Clauses in mortgage contracts used by lenders forcing borrowers to pay up to €3,000 in set-up fees like the notary and land registry were unfair and therefore null and void. Now, in individual cases, courts around Spain have started awarding borrowers refunds from banks based on this ruling.
Over the past decade, Spanish banks have been overcharging customers for mortgages. Millions of borrowers have been forced to pay for set up costs, unfair insurance policies and overpayment of interest. “Abusive” clauses hidden in the small print of contracts have resulted in many paying far more than they should. Most were unaware these clauses existed.
The European Court of Justice and Spanish Supreme Court have ruled that such clauses are illegal and that borrowers are now entitled to challenge the banks to have their mortgage reduced, reclaim overpaid interest, recover some or all set up costs and insurance premiums, going back to the commencement of the mortgage.
Foreign borrowers will not be able to calculate how much they've been overcharged. Most will not be able to understand or deal with the process. The decree doesn't oblige banks to pay claimants in full. Lenders can pay settlements they deem fit. Many will be left with no alternative but to take expensive and risky court action.
We have successfully managed 00s of claims on a no win no fee basis for victims. Our lawyers know that group action has been an overwhelming factor in the level of compensation achieved. We will manage your case from preliminary out-of-court negotiations through to settlement. We will attend court as your representatives and throughout will manage your claim professionally and diligently, for a swift and effective outcome.
Over the past decade many Spanish banks have issued mortgage agreements that have been found to contain “Abusive” clauses, resulting in borrowers paying far more for their loan than they should.
Many of the “Abusive” clauses, written in Spanish legalese and hidden within the small print of contracts are only found after careful analysis of the mortgage agreement (our lawyers have so far uncovered more than 30).
The European Court of Justice has ruled that such clauses are unlawful and mortgage holders are now entitled to challenge them.
Borrowers can seek to :-
A clause that is ruled “Abusive” under Spanish law, inflicts harm on the consumer and benefit the professional who drafted the contract.
A clause can only be branded "Abusive" if ruled to be so by a Judge.
Variable-rate mortgages or Tracker mortgages are common in most countries and are designed to protect both the lender and borrower from unpredictable volatility by reflecting the cost to the lender of borrowing on the credit markets.
If interest rates are high then the cost to borrow is high. Conversely, if interest rates fall, the cost to borrow falls.
Over the last decade, more than 400,000 Brits have bought a Spanish property, many took out variable-rate mortgages that track the Euribor or European Interbank Offered Rate.
In December 2015, the Spanish Supreme Court ruled that mortgage clauses introduced by Banco Popular and BBVA that forced borrowers to pay all fees related to taking out the mortgage were abusive.
The Court ruled that the banks should pay for all or at least part of these mortgage opening expenses, because - for example - making a formal record of the mortgage deed is for the benefit of the bank.
Since then various First Instance and Provincial Appeal Courts have issued similar sentences in favour of mortgage borrowers.
The Supreme Court Sentence 705/2015 dated 23 December 2015 declared abusive the following clause in which BBVA imposed on the borrower the payment of all expenses, taxes and commissions associated with the mortgage loan:
Attached abusive insurance costs (Life insurance, Mortgage repayment Insurance)
Banks for years have been selling expensive insurance policies to those seeking a mortgage to purchase a property in Spain.
Most bank staff have pressured borrowers by insisting that the policy was a requisite to obtain the mortgage, with most unaware that they could shop around and find cheaper quotes from insurance companies.
The only insurance that a bank can insist on linking to a mortgage is buildings insurance!
Borrowers were incorrectly told that Life insurance was mandatory; the Banks then imposed a particular insurer (usually a part of the same company or financial group) on the borrower, and then in most cases managed to tie the borrower into paying the premiums for the full term of the policy simultaneously with the mortgage agreement.
Costa Teguise, L&B M, purchased a property for €300,000 in 2004 and sold it in 2015 at a significant loss because they were unable to afford the mortgage payments on a €200,000 mortgage.
Montana 7, Sands Beach Resort, Mr A.R.M, purchased a €150,000 single bed poolside villa property within a complex in 2004 with the help of a €100,000 developers mortgage, which he is still paying today.
Calle Argentina 9, S&J H purchased a two bedroom apartment in 2004 at the top of the market for €279,000 with the assistance of a €110,000 La Caixa mortgage. They sold the property in 2015.
They had an acute sense of having been charged for everything. Their mortgage payments did not alter throughout and so we anticipate they will have been overpaying around €150 for six year. We anticipate that the analysis of their mortgage will reveal a number of items that the bank should have paid for but were passed on to the borrower.
