Mortgage floor clause: what it is and how to claim the bank
The vast majority of mortgage loan contracts in Spain contain the so-called ground clause, declared abusive by the Court of Justice of the European Union. If this is your case, you can claim your return from the bank, even if you have already paid off the mortgage. Here’s how.
Clause ground: everything starts with the euribor
To understand what the floor clause is, we must start at the beginning: interests. For each loan a bank grants, it charges an interest, calculated as a percentage of the amount owed. In the case of Spain, the usual was to set that interest as a differential above the Euribor. The Euribor is, to put it in simple words, the interest that European banks charge each other. This information is published periodically.
Thus, if your loan had an interest of Euribor plus 3%, it meant that if at the time of signing the contract, the Euribor was at 4%, the interest to charge you during the period (semi-annual or annual) would be 7%. If at the end of the period, the Euribor rose to 5%, for example, you began to pay 8% interest on your loan. If, on the other hand, it decreased to 3.5%, then you paid 6.5%, and so on.
What is the floor clause?
With the floor clause in the contract it was established, however, that although the euribor goes down a lot, you will never stop paying an interest below, say, 6%. When the Euribor was high, this looked reasonable. But is that the euribor has fallen even to get to be located in negative rates. (Yes, believe it or not, banks have come to pay for lending money to other banks and not the other way around).
Thus, in the case of the example, with a 0% Euribor, the interest rate should be 3% per year, but by the floor clause, it remains at 6%.
Ground clause: the EU rejects it
The Court of Justice of the European Union has declared that this clause, consequently, is abusive. Therefore, the injured parties have the right to be reimbursed for what they have overcharged. But not only from 2013 – as interpreted by Spanish jurisprudence – but from the beginning of the contract.
Clause ground: how to claim it
However, this return is not automatic, but each injured party must claim it.
The first thing you have to do is calculate, with your contract in hand, how much they may have overcharged you, to get an idea of the economic damage they caused you.
Second, submit a written claim to the bank, requiring the return of the overcharged.
If, after a reasonable period of time, the bank does not agree to your request, you will have to sue it judicially. In this case, the bank will not only have to reimburse the amounts charged for more, but costs and court costs, including interest.
Clause floor: our recommendation
If you have a mortgage, it is likely that it contains a floor clause, and that the bank has overcharged you. We are talking, quite likely, several thousand euros, so it is definitely worth claiming. The most advisable thing is that you do it through a lawyer. This will present your case in the best way and with greater possibilities of obtaining the highest compensation.