mark donna

I am after some advice regarding my Spanish mortgage

10 years ago I took out a Spanish mortgage which was linked to the eurobor,the terms which my rate would be set at would be 0.7% above the eurobors 12 month rate but my mortgage rate could not drop below 3.75% which ar the time seemed a good deal as interest rates were running at 5.5% so as you can see for the last few years I have been paying 3.75%. Out of the blue today my bank (Solbank) rang me to say that in the near future my mortgage agreement will be scrapped and a new deal will be put in place which as yet they do not have information but if I was to agree they will set me up on a fixed mortgage till the end of the term (20 years) at 3.25% this sounds the way to go but I am always sceptical to banks and deals is there anyone out there with good banking knowledge who could advise me which way to go stick or twist

Pulaski

What is the market rate for refinancing? If they're offering you something for free, there may be even better deals out there.

A few years ago I was offered a "free" interest rate cut (not in Spain), and while there were better rates "out there", the fact that there were no fees for the free refi made the offer attractive.

mark donna

They have told me there will be no fees involved for the change of mortgage

Pulaski

Right, but if you are prepared to pay fees there may be an even better deal. So the question becomes "Is a deal with fees good enough to justify paying the fees?"

mark donna

I think if I try and get out of my present mortgage/bank there will be cancellation fees also I do not think there will be much better long term rates, what I can't get my head round is why the bank would offer me a deal which is less money for them then what I am giving them now, is there a possibility that the mortgage I have now being scrutinised by the government over the minimum rate (3.75%)

Pulaski

In my case the offer was mandated as part of a wider reorganization of the banks and the mortgage market, and to help stimulate the economy.

I could imagine it would be the same reason for you, given the mess in the Spanish/European economies.

Fred James

Be very careful about this. The concept of a minimum rate (floor) on a variable rate mortgage has been declared illegal and it is possible to reclaim any excess payments caused by this clause in the original mortgage contract.

I have no personal experience of this but have seen comments about this in the press.

It may be that the bank want to get off the hook by persuading you to transfer the outstanding debt to a fixed rate mortgage where there are no caps or floors in the rate.

I would take professional advice on this before changing to a new deal.

mark donna

thank you for that information not speaking Spanish and only using as a holiday home I would hate the hassle of a PPi type compensation claim with my bank but I am worried which way to turn but there offer does seem too good to turn down.

avocados

They were deemed abusive, not illegal.

the current state is as follows.......
The Supreme Court ruled in May 2013 that the suelo was abusive and therefore all excess payments from that date should be returned to the customer.

But, they are waiting for a ruling from the ECJ (due soon) to decide if the ruling should apply from the original contract date.

So, wait for the result. Do not change your mortgage. When they contact u again, ask them how do you apply for the return of the excess money.

mark donna

thank you for this advice can you tell me why the bank would not reimburse me for the back debt if I did change my mortgage,(similar to how you claim for PPI from years ago) also are you saying that if the eurobor is at 0.5% I should only be paying 1.2% interest

EsuriJohn

Yes that is exactly what is being said. You will also note as part of this wonderful offer they want you to sign away your right to make any further claim on the overpaid the overpaid interest. If you are in uk you should ring and ask them to send th documentation in the post it is in Spanish and English and contains the renunciation clause in heavy type underlined. They want this completed asap ie before the final decision on taking the payback right to the start of the mortgage which would cost them a lot. Many have successfully persued a claim right back to the beginning of the mortgage reclaiming many tens of thousands of euros!

EsuriJohn

Just came across this article on Citizens Advice Bureau Spain. I know full length quotes are frowned upon but this is so important to all those caught up in this scam I hope it is allowed to stay.

"Bank manipulates mortgage holders into signing agreements.
The lawyers have advised that those who have recently been coerced into signing agreement for a fixed rate mortgage or and to give up their rights to claim the monthly overpayments for many years due to this clause, should also contact us. Banco S*******, Be aware that we are informing your clients.
From the amount of communications where certain banks are also contacting holiday home owners in the UK, to sign an agreement. I suspect the expected ECJ ruling will be sympathetic to the consumer. ‪#‎bankmortgagescam‬"

mark donna

Thanks for this information John, I believe I am with the same branch as you, I was emailed 2 documents yesterday and yes one does say I will lose any right to make a claim if I agree to the fixed mortgage, so should I refuse the offer of the fixed mortgage in the hope that the EU back the consumer or think of the long term gain of the 3.25%

EsuriJohn

You have to make that choice however you should realise that despite what the graphs try to show and the text seems to confirm the current eurobor is zero and is predicted to go negative so for a long time ahead you should be paying no more than 0 + say 1.25% and recover at least back to 2013 if you stand your ground. Others at this branch have already done it without the aid of a lawyer.

calidana

This is truly wonderful news for all of us who have suffered at the hands of the Spanish banks. It is unbelievable (although not surprising) that they should still try to rip off the customer by signing these new documents.
I have had sporadic battles over the years with my bank (Banco Atlantico) about my high interest rates and never achieved anything. Two months ago they told me they could reduce the rates then later came back and said they could not as originally the mortgage was taken out with Banco Pastor (who were taken over by Atlantico).


I am really hoping this ruling will apply to all banks (anyone know?) as my rate is 3,5% meaning I pay at least 6000E a year in excess interest.