I’ve had a few enquiries about the mortgage repayment moratorium the Spanish Government introduced a few weeks ago to help people struggling to pay their mortgage as a direct result of the economic maelstrom brought about by the coronavirus crisis. The scope of the moratorium is understandably limited to residents struggling to pay the mortgage on their main home, and the conditions are subject to change. Non-resident and holiday-home owners don’t qualify for relief, but anyone in those groups now struggling to pay a mortgage in Spain will find some advice at the bottom of this article.
The mortgage repayment relief was approved by royal decree on the 17th March as part of a packet of economic measures worth 200 billion Euro, the equivalent of 20% of Spanish GDP, designed to soften the blow of the crisis on families and businesses.
The first thing to note is that this moratorium on mortgage repayments only applies to residents of Spain struggling to pay the mortgage on their main home, who can demonstrate financial distress directly related to the coronavirus crisis. So don’t expect any relief if you can’t pay the mortgage on your Spanish holiday-home because tourist rental bookings have collapsed or you lost your job back home. If that’s your situation, skip to the bottom of the article for some advice for you.
Borrowers who qualify for relief can apply for a temporary, interest-free mortgage repayment holiday or deferment for the duration of this royal decree. The application can be submitted up to 15 days after the decree expires. Some sources report this deadline for applications as currently standing at the 3rd of May, unless extended by the Spanish cabinet.
Spanish mortgage moratorium requirements
- Borrowers who can demonstrate they have lost their job or seen their income slashed by 40% or more as a result of the Coronavirus economic crisis.
- Total family income in the month prior to requesting mortgage payment relief was no higher than three times the IPREM household income reference point, with some exceptions for special cases such as people with disabilities.
- Mortgage repayment plus expenses and monthly utility costs are greater than or equal to 35% of net household income.
- Mortgage repayments as a percentage of household income have increased by at least 1.3 as a result of the deterioration in household finances as a direct consequence of the Coronavirus crisis.
You have to apply for this mortgage relief with your lender providing proof of unemployment or business distress, your Family Book to accredit household members and dependents, home ownership documents including the nota simple land registry filing, deeds of sale and mortgage deeds, and a debtor’s declaration of responsibility in compliance with the requirements of this decree
Non-resident and second-home owners in financial distress
If you suddenly find yourself in financial distress as a non-resident or second-home owner thanks to this crisis, and may be forced to miss your Spanish mortgage repayments, you need to get hold of the situation quickly, and start talking to your lender about the options. If you feel you need professional help from experts who know how to negotiate with banks and get you the best outcome, get in touch with financial distress and negative equity experts EU Property Solutions to discuss your case.