Information Hub
Your Questions Answered: Understanding Floor Clauses
As specialists in supporting UK residents with claims against Spanish banks, we’re here to provide clear, helpful information to guide you through the process of reclaiming your money.
General Information About Floor Clauses
What is a floor clause?
A floor clause (or Cláusula Suelo) is a term in many Spanish mortgage contracts that sets a minimum interest rate, preventing borrowers from benefiting when interest rates fall below a certain level. Even if the market rate (like Euribor) drops, your mortgage interest rate won’t go lower than the specified floor, which can result in overpayments.
Does every mortgage have a floor clause?
No, not every mortgage includes a floor clause. They were common in Spanish variable-rate mortgages, but not all banks or mortgage agreements included them. It’s important to review your mortgage contract or seek professional help to determine if your mortgage had one.
What banks don’t usually have floor clauses?
The presence of a floor clause varies by bank and specific mortgage agreement. Major banks such as BBVA and others were ordered to refund overpayments related to floor clauses, but each case is different. Consulting a professional is the best way to determine if your bank used these clauses.
What years do floor clauses usually cover?
Floor clauses can be claimed for mortgages taken out as early as 2001. Following a 2013 ruling by the Spanish Supreme Court and a 2016 decision by the European Court of Justice (ECJ), it was determined that mortgage holders are entitled to refunds for the entire period they overpaid, back to the inception of the clause.
Does this apply to fixed-rate mortgages?
No, floor clauses only apply to variable-rate mortgages, where the interest rate fluctuates based on a reference rate like Euribor. Fixed-rate mortgages, where the interest rate remains constant throughout the term, do not have floor clauses.
Can I claim if I renegotiated my mortgage?
Yes, you can still claim even if you renegotiated your mortgage, as long as the original mortgage had a floor clause and it led to overpayments. It’s crucial to review the terms of both the original and renegotiated mortgage to assess the claim.
Eligibility and Claim Process
How is it possible to claim on a floor clause?
It’s possible to claim on a floor clause because the Spanish Supreme Court ruled in 2013 that these clauses were unfair, especially if they weren’t clearly explained to borrowers. The European Court of Justice reinforced this ruling in 2016, stating that affected mortgage holders must be refunded for the entire period they were overcharged, dating back to 2001.
To claim, you’ll need to provide your mortgage documentation for review, and our legal expert can help you file the claim to recover the overpaid amounts.
How do I find out if I can claim on my mortgage?
To find out if you can claim, you’ll need to check your mortgage contract for a floor clause (Cláusula Suelo). If you’re unsure or can’t locate the clause, we can assist. By providing us with your mortgage deeds and NIE number, we can review the documents for you. We offer a free consultation to assess your mortgage and determine if you’re eligible to claim.
How quickly can you advise if I have a valid claim?
If you provide the necessary documents, we can usually advise whether you have a valid claim within 24 hours. Our team performs a detailed review of your mortgage to determine if a floor clause was applied and whether you are eligible for a refund.
Can I claim on an old mortgage?
Yes, you can claim on an old mortgage, even if it has been redeemed. Claims can be made for mortgages dating back as far as 2001, provided they included a floor clause, and you may still be eligible for a refund.
What if I no longer own the property and haven’t for some time?
You can still claim if you no longer own the property. The fact that the mortgage has been paid off or the property sold does not affect your right to reclaim overpaid interest due to a floor clause.
Can I claim if I have arrears on my mortgage?
Yes, you can still make a claim if you have arrears on your mortgage. However, any refund you are entitled to may first be used to cover those arrears. It’s important to review your specific situation with a legal expert.
Can I claim if my mortgage was with a now-defunct bank?
Yes, you can still make a claim even if your mortgage was with a bank that no longer exists. The rights to your mortgage and any liabilities, such as overpayments due to a floor clause, are typically transferred to the new bank or institution that took over. We can help trace the relevant entity to file your claim.
Can I claim on a mortgage I took out jointly with someone else?
Yes, you can claim on a jointly held mortgage. However, both parties who originally signed the mortgage contract may need to be involved in the claim process, depending on the bank’s requirements. Our team can assist with this and guide you through the necessary steps.
Can you help if the bank has already rejected my claim?
Yes, if your bank has rejected your claim, we can still help. Banks may reject claims, but that doesn’t mean you aren’t entitled to a refund. We can review your case, advise on next steps, and, if necessary, pursue legal action on your behalf.
Is there a time limit for making a floor clause claim?
There is currently no fixed deadline for making a floor clause claim, but acting sooner rather than later is advisable. The legal landscape can change, and waiting too long might affect your chances of reclaiming overpaid interest.
Does this service apply to commercial mortgages?
No, floor clause claims typically apply to residential mortgages, not commercial ones. Our service focuses on helping individuals reclaim overpaid interest from residential mortgages with unlawful floor clauses.
Can I claim if I’m not living in Spain?
Yes, you can claim even if you’re not living in Spain. We specialize in helping UK citizens with Spanish mortgages, and many non-resident mortgage holders have successfully reclaimed overpayments due to floor clauses. We handle all aspects of the claim process on your behalf, so you don’t need to be in Spain to proceed with your claim.
Costs and Financial Aspects
What is ‘no win no fee’ – what’s the risk to me?
No win no fee is exactly what it says, if we don’t win your floor clause case, we do not take a fee. The only cost to you in this process would be the payment required to the Foreign Commonwealth Office for a Power of Attorney to be sworn and apostilled. There is no risk to you, we underwrite all costs.
If I lose, do I have costs to pay?
No. We underwrite all associated costs. We do not take on a case we do not think we can win and as such if we do not achieve the result, we outline you within our Service Agreement you will not have to pay any costs.
How much does it cost?
We work on a No Win No Fee Basis. There is no up-front payment required. We are paid only on Success. Our fee is 30% of what we recover for you.
Are there any other costs?
Yes. You will be required to pay a Fee to a Notary Public to sign and witness a Power of Attorney to allow our Spanish Legal team to act on your behalf. This document will then be sent to the Foreign Commonwealth Office to be Apostilled. This process legalises the document for use in Spain. This cost is typically £300- £400 depending on the Notary used.
How much can I claim?
This depends on various factors. Namely, how much did you borrow, what interest rate you were charged and the term of the mortgage. When making your enquiry our Legal Team will assess the essential documents and information to outline a figure we can recover.
Is interest added to the claim?
Yes, compensatory interest will be added to the Claim. This amount varies and depends on the level of the claim and financial loss suffered.
What currency do I get paid in?
All claims won are paid out in Euros (€). These funds can be paid directly to a Euro Bank account if you hold one. Alternatively, for a Pound Sterling Bank account a payment can be made and will be subject to Currency Exchange Rates on the day of transfer.
Legal and Administrative Process
Why must I give Power of Attorney?
The Power of Attorney is an essential legalised document which allows our trusted Spanish Legal Team to make representations to you in respect of your Floor Clause Claim. Without this document we cannot represent you.
Can you assist with a Power of Attorney and what does it cost?
Yes. We will draft the document. It will be written in both English and Spanish. Your Case Manager will complete the document alongside our Spanish Legal Team. We will then forward it to your chosen Notary with clear instructions on the Signing and Witnessing of documents once you have made an appointment.
The typical cost for this process is £300-£400 including the document being sent to the Foreign Commonwealth Office for Apostille.
Why would a bank pay this to me?
It’s possible to claim on a floor clause because the Spanish Supreme Court ruled in 2013 that these clauses were unfair, especially if they weren’t clearly explained to borrowers.
The European Court of Justice reinforced this ruling in 2016, stating that affected mortgage holders must be refunded for the entire period they were overcharged, dating back to 2001.
As this precedent was set by the Spanish Supreme Court Banks are at liberty to pay borrowers who they wronged.
Who deals with the solicitors?
We do. Given the language barrier here many people feel it difficult to communicate with counsel. Our Case Manager is bi-lingual and will be able to present updates to you from our Spanish Legal team, and should you have any specific queries these can be relayed to them correctly.
Will I need to attend court in Spain?
No. With the Power of Attorney provided our Legal Team will make full representations on your behalf in Spain.
What if my bank refuses to refund me?
Initially, a Bank has three months to respond to a Letter of Claim. Should the Bank not respond or decline a refund is due then the matter will be moved to the Court System. It will then follow process until a judge gives a verdict on the claim.
What happens if my bank merges or changes names?
Bank mergers are common in Spain. We have seen many core lenders in recent times merge and change their names to become a new entity. Nonetheless, your claim is still valid and we can make an application on your behalf.
Timeline and Communication
How long does a claim take?
The process for claiming refunds related to floor clauses typically takes between 9 to 12 months. This includes preparing your claim, submitting it to the bank, and navigating through the legal proceedings.
Once your claim is accepted, the bank is required to pay out within 3 months. The exact duration can vary based on the complexity of your case and the responsiveness of the bank.
How often will you update me?
We provide regular updates throughout the claims process. You can expect to receive updates at key milestones, such as when we receive responses from the bank, progress on your claim, and any significant developments.
We aim to keep you informed and involved at every stage to ensure you are aware of your claim’s status.
Documentation and Requirements
What information do I need to start the process?
To start the process, we need the following information:
- Mortgage Documents: Your mortgage deed and any documents related to your mortgage agreement, including any amendments or renegotiations.
- Proof of Payments: Records of your mortgage payments to help calculate any overcharges.
- Identification: A copy of your passport or ID and, if applicable, your NIE number (foreigner identification number) to verify your identity.
- Power of Attorney: A signed power of attorney allowing us to act on your behalf in Spain.
- Contact Details: Your current contact information to keep you updated throughout the process.
If you have any difficulties gathering these documents, our team can assist you in obtaining or verifying the necessary information.
I can’t find my mortgage deed – can you help?
Yes, we can help you with this. If you’re unable to locate your mortgage deed, we can assist in obtaining a copy. You may need to contact your previous bank or lender to request a duplicate.
If you encounter difficulties, our team can guide you through the process of retrieving the necessary documents to proceed with your claim.
Why do I need my NIE number?
We need your NIE number to verify your identity and process your claim. The NIE (Número de Identificación de Extranjero) is a unique identification number assigned to foreigners in Spain for legal and administrative purposes. It is essential for handling claims related to Spanish mortgages and other official procedures.
Where do I find my NIE number?
Your NIE number can typically be found on official documents issued by Spanish authorities, such as your residence permit, tax documents, or previous correspondence from Spanish institutions.
If you cannot locate it, you can request a copy from the Spanish consulate or embassy in your home country or contact Spanish authorities directly for assistance.
My husband/wife/partner died – can I still make a claim?
Yes, you can still make a claim if your spouse or partner has passed away, provided you are their legal heir or executor. In such cases, you will need to provide documentation proving your relationship and inheritance rights. Our team will guide you through the necessary steps and help with any additional paperwork required to proceed with the claim.
Additional Considerations
Will claiming impact my current mortgage terms?
No, claiming for a refund on overpaid interest due to a floor clause should not affect your current mortgage terms. The claim is focused solely on recovering the excess amounts you were charged in the past.
Your mortgage terms, such as your current interest rate and repayment conditions, will remain the same unless you choose to renegotiate or modify your mortgage separately.
Will claiming impact my ability to get another mortgage?
Claiming a refund for a floor clause should not impact your ability to get another mortgage. The claim process only relates to recovering overpaid interest from your current or past mortgage, and it doesn’t affect your credit score or mortgage history in most cases.
However, if you are in arrears on your current mortgage or have any legal disputes with the bank, it may influence future lending decisions. It’s recommended to discuss any concerns with a mortgage advisor before making a claim.