The last decade was torrid for Spain’s banks. They overlent and overspent during the property boom and suffered during the subsequent crash. Many went bust or merged.
Now, it turns out that lots of the mortgages that the survivors gave to customers during and after the boom contained illegal clauses.
So illegal in fact, that they owe a lot of money to a lot of people.
Recent Supreme Court and European Court of Justice rulings mean that Spain’s banks should now be giving it back.
However, they are resisting paying up until forced to.
Three ways to get your money back from Gran Canaria banks
The Clausula Suelo
Spain’s banks illegally set a floor on the interest rates paid by mortgage holders. It allowed them to profit when the EURIBOR rate used to calculate Spanish mortgage rates dropped below a certain level. The banks borrowed cheaply but charged their customers much higher rates.
It was illegal profiteering!
The Spanish Supreme Court ruled in 2013 that Clausulas Suelo are so illegal that they are null and void. This was backed up by a 2016 ruling at the European Court of Justice.
It means that up to four million mortgage holders across Spain can claim back a total of four billion euros of excess interest payments.
However, there are a couple of caveats in the ruling that mean you need a lawyer to fight to get your money back.
To have your Clausula Suelo declared null and void, you have to prove these two things:
- That the clause has caused you harm in some way. The most obvious harm to claim would be financial hardship.
- That the clause benefited the person who convinced you to sign it. For example, if the bank employee who signed you up received a bonus of some sort.
- To start a clausula suelo case against your Gran Canaria bank, or for legal information about any illegal bank clause, contact the local experts Montelongo Asesores. They are a long established legal firm with an excellent track record of helping foreign residents in Gran Canaria.
January 19, 2017: Even if you don’t want to go to court, it looks like there’s a solution coming up: The Spanish government has ordered Spain’s banks to get their affairs in order and start offering customers their Clausula Suelo money back. The banks are arguing that they don’t have the cash and that they should be allowed to knock it off the outstanding mortgage debt owed by their customers.
The Claúsulas sobre los gastos de formalización de la hipoteca
The Spanish Supreme Court ruled in 2015 that it was illegal for Spain’s banks (Banco Popular and BBVA) to make the consumer pay all the costs of setting up a mortgage.
Specifically, the fees associated with notary fees, administrative expenses, land registry fees, and the Impuestos de Actos Jurídicos Documentados (this last one is still in dispute).
The amount that consumers can claim back is still unclear as the ruling hasn’t been tested thoroughly in the courts. However, estimates suggest that a mortgage holder could get back up to 3000 euros back on an average mortgage of 140,000 euros.
Claims can be made until December 24, 2019, if your mortgage is still active. If you paid off the last of your mortgage in the four years leading up to December 23, 2015, you are also entitled to claim.
Other Spanish banks (Santander, CaixaBank, Bankia, Sabadell) have changed their mortgage small print (and are now paying some of the setup costs for new mortgages), but haven’t yet admitted that the ruling affects them.
Until the consequences of this ruling become clear, you’ll need a good local lawyer to take on your mortgage provider and get your fees back.
These complex mortgages used multiple currencies and financial tools such as derivatives to keep interest payments low. They were a specialist product marketed during the boom years (2006-2009) and there are only 60,000 in Spain.
However, the Supreme Court and the ECJ have ruled that this kind of mortgage was too complex and risky for consumers.
You can now apply to have your hipoteca multidivisa turned into a standard euro mortgage and have any excess payments wiped out.
If you have a multidivisa mortgage in Gran Canaria, we advise you to talk to local specialists Montelongo Asesores.