Abusive Insurance costs

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.

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Abusive mortgage 'set-up' costs

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:

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Floor-clauses (Clausula suelo)

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.

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Situation report in brief (+ start your claim).

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 :-

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