Healthplan Spain


Spain's New Mortgage Moratorium Explained Expat Tips

This week, the Spanish government implemented a new law to protect homeowners in Spain who may be affected by the recent Coronavirus outbreak.

The new moratorium came into force on Wednesday and aims to protect the most vulnerable in the event that they are unable to make their mortgage payments.

As a result, homeowners are now able to make a claim and have their mortgage payments frozen.

The official document outlining the new law was published to the Spanish government’s website here.

It is important to note that some of the points below are open to interpretation, which mortgage providers may or may not take advantage of.

However, below we have outlined the main points including who can benefit from it and how to make a claim.

What is the new mortgage moratorium?

Homeowners who can prove that they are economically vulnerable due to the Covid-19 Coronavirus crisis can request that their mortgage payments (including the interest) are temporarily suspended.

Guarantors are also covered with banks unable to apply an early maturity clause.

How long will the moratorium last?

The standard period is one month from when the new law came into force which was on March 18. However, this may be extended further for up to 3 months.

Will I be able to claim?

This is a question that the new law fails to answer definitively. The new decree says that those who suffer “extraordinary difficulties in meeting their mortgage payments as a consequence of the Covid-19 crisis” can benefit from the moratorium. However, it is unclear how this can be established.

The document outlines four possible conditions which may determine whether a homeowner can be classed as ‘vulnerable’ or not. It is also unclear as to whether just one would suffice or whether all of the conditions must be met.

The conditions are:-

  • Have been unemployed or for business owners and professionals have suffered ‘a substantial loss’ of income or ‘a substantial fall’ in sales.
  • The total income of the family does not exceed €1,612.52 euros or three times the monthly Iprem of € 537.84. If there are children or people over the age of 65, the amount can be increased by €53.74 for each one. The threshold will also increase where a member has a disability.
  • The mortgage payment exceeds 35% of the net family income.
  • Where the economic capacity has been reduced or where sales have dropped by at least 40%.

Does the new moratorium cover second homes?

No. The new decree will only cover mortgage loans for habitual residences.

What documentation will need to be produced to make a claim?

This will depend on the personal situation of the claimant but the following will generally be required.

  • A certificate of unemployment for employed workers or a certificate of cessation of activity for in the case of the self-employed which must be issued by the tax agency or an autonomous authority.
  • The number of people in the home must be recognised by either the family book or for a common-law couple a certificate of Hecho de Pareja. Proof of disability will also need to be provided.
  • You will need to provide proof that you are the owner of the property including the deeds of sale and mortgage deed documentation.

How do I make a claim?

To apply for the moratorium, you will need to request it directly from your lender. In most cases, this will mean making a visit in person at your bank producing any required documentation.

Although the new law will be very welcome in such troubling times, many experts believe it does not go far enough and that it is very vague especially in how people are defined as ‘vulnerable’.

This may mean that the law is open to interpretation by lenders and lead to many who have been legitimately put into hardship by the Covid-19 outbreak, not having their payments frozen.

Government ministers have been debating as to whether those who rent should also be protected under the new legislation however there has been no agreement at this time.

The new set of measures also includes a ban on cutting basic utility supplies including water, electricity and gas to vulnerable people.