Over the last 10 years and especially during the years 2005 to 2008, most mortgages were taken out with Spanish Banks on a VARIABLE INTEREST RATE which were linked to the LIBOR RATE or SPANISH BANK RATE
However, some of these Banks and most Savings Banks included a special clause known as the “FLOOR CLAUSE”. This clause stated that there would be a FIXED MINIMUM of interest that the borrower would pay! In many cases, the FIXED MINIMUM was fixed at 3.5% to 4%.
If the mortgage rate fell below 3.5% or 4% during the mortgage term, the borrower would not pay less interest than the fixed rate stated on their mortgage. This minimum fixed rate is known as the “FLOOR CLAUSE”.
The Spanish Courts have declared over the past few years, that the “FLOOR CLAUSE” is unbalanced and therefore unfair to borrowers. The Banks had failed to explain this clause efficiently and did not highlight as to how this would affect borrowers if the interest rate should fall below the FIXED RATE. The Courts have ruled that the said Minimum Interest “FLOOR CLAUSE” to be removed as this clause is deemed abusive. The removal of this clause would result in a DECREASE of INTEREST PAYMENTS to borrowers. The Courts had ordered Banks to recalculate INTEREST RATES from the FIRST DAY of existing mortgages and to REFUND any INTEREST OVERPAYMENTS to borrowers.
On 9th May 2013, the Supreme Court issued a controversial judgement confirming the cancellation of the “FLOOR CLAUSE” in relation to the Banks involved in the court procedure. BBVA, Cajamar Caja Rural, Sociedad Cooperativa de Credito (today Cajas Rurales Unidas, S.C.C) and Caja de Ahorros de Galicia, Vigo, Orense and Pontevedra (today NCG banco S.A.U.). This judgment also stated that, in order for the national finances not to be affected, the Banks were not obliged to return overpaid interest amounts to borrowers.
This judgment has aroused different interpretations and today, each Court has been applying contradictory criteria although the majority DO NOT oppose any refund of overpayment of interest to borrowers.
The judgment from the Supreme Court is at this moment in time being appealed before the EUROPEAN UNION COURT OF JUSTICE and a final judgment is imminent. Whilst awaiting the final outcome of appeal, it is believed the judgment will be in favor of all borrowers and that all Banks and Savings Banks that included the “FLOOR CLAUSE” in their Mortgage Contracts will have to reimburse any OVERPAID INTEREST to borrowers.
The longer your mortgage has been in existence, the more your refund of overpaid interest would be.
Our lawyers would on your behalf, apply to your Bank from where your mortgage was issued on a “NO WIN” “NO FEE” BASIS.
Should your claim be successful. 20% of the Gross Overpayment Interest Refund would be charged by our lawyers to cover Expenses, Disbursements and Fees.
Should your claim not be successful, NO FEES would be charged to you!
All that would be required is the Original or Copy of your Mortgage documents and Power of Attorney which will enable our lawyers to act on your behalf for the said property.