Thousands paying up to €200 extra per month on their Spanish property mortgages

The Spanish property law experts at CostaLuz Lawyers are seeking to alert anyone who owns property in Spain that they may be able to claim refunds on their mortgage payments. The move follows a string of wins in the courts for property owners with a Cláusula Suelo (Ground Clause) in their mortgages.

The Ground Clause was included in many Spanish mortgages. It establishes a minimum interest rate applicable to mortgage repayments, meaning that variable rate or tracker mortgages never saw the benefits of falling interest rates filter through to the mortgage holders. In many instances, the banks issuing the mortgages did not clearly explain the implications of the Ground Clause. This has created the potential for mortgage holders to claim back the overpayments.

Keith Rule, CostaLuz Lawyers said “While variable rate and tracker mortgages are linked to the Euribor rate, the inclusion of Cláusula Suelo meant that the interest rate could never drop below a much higher rate fixed by the bank. This has seen many mortgage holders paying several percentage points more in interest than they should have been over the past decade and more. We are keen to alert them that there is hope for having Ground Clauses removed from the mortgages and for reclaiming the overpaid interest.”

When the markets crashed at the end of 2008, so did the Euribor rate. This meant that, from early 2009, mortgage holders should have been paying much lower interest. However, those with a Ground Clause in their mortgage weren’t able to do so.