Relief for Spanish Mortgage Payers

Coronavirus:  a world-engulfing health crisis that many homeowners fear could quickly lead to economic crisis. But there is good news for Spanish mortgage payers, as the Spanish government have announced that they will support Spanish homeowners in the form of mortgage relief, whilst the current crisis is in full swing.

The mortgage repayment relief was approved by royal decree on the 17th March and the wide-reaching package is with 200 billion euros, which is equal to approximately 20% of the annual Spanish GDP. The aim of the relief package is to support both families and businesses. If you currently have a mortgage in Spain,  then you’re probably wondering how this package will support you. Here is a brief outline of the terms of the mortgage moratorium scheme, and details of how you can find the help you need:

Am I Eligible?

One of the first questions asked by ex-pat homeowners in Spain is whether they are eligible for the mortgage relief support being offered by the Spanish government. The answer to this question will depend on whether you are a permanent resident in Spain, and how many properties you own.

If you are non-resident or holiday homeowner then you are not eligible for Spanish mortgage relief, as the focus of the scheme is to keep people in their main homes. If you are a resident of Spain and a single home owner  then, provided you can demonstrate financial distress directly related to the coronavirus crisis, you will be eligible to apply for a moratorium on mortgage repayments – effectively an interest free mortgage repayment holiday.

Mortgage Moratorium Requirements and How to Apply

One of the main requirements of applying for a mortgage repayment holiday is that you can demonstrate that you are in genuine financial need. This means that at least one of the following conditions must apply:

• You can demonstrate that you have lost your job, had a significant reduction in working hours, or seen your income cut by at least 40% as either a direct or indirect result of the current Coronavirus crisis.
• The cost of your current mortgage repayments, in conjunction with your monthly utility bills and other fixed household expenses is more than (or equal to) 35% of your next household income, as a result of either an increase in the cost of expenses or a decrease in income.
• Your mortgage repayments now represent a significant proportion of your household expenses, and paying them will consume a significant part of your current household income, as a result of the coronavirus crisis.
• You do not have an exceptionally high household income. Your total family income in the month before you make a request for mortgage payment relief should be no higher than three times the IPREM household income reference point. The only exception to this rule is in the case of individuals with special circumstances, such as disability. If you’re not sure whether your circumstances would fall under this remit, it is worth making the application.

Fulfill the criteria and ready to apply for support? It’s a surprisingly straightforward process. You should make your application directly to your lender. They will ask that you provide either proof of your unemployment, reduced working hours, or that your business is in distress. You will also need to provide your Family Book to verify how many dependents you have, and the number of members there are living within your household. Finally, you will need to prove that you still own your own property by providing the nota simple land registry filing, deeds of sale and mortgage deeds, and then you should sign a debtor’s declaration of responsibility: this is essentially a document declaring that your application complied with the requirements of this decree, and that you believe you are eligible for a mortgage repayment holiday.

Getting Help if you Are Not Eligible for a Mortgage Moratorium

Do you fail to fulfill the requirements to apply for a mortgage repayment holiday, but are still struggling to make your mortgage repayments? The crisis is likely to take a financial toll on all of us, including non-resident or second-home owners. If you’re concerned that you may not be able to afford your next mortgage repayments, then the best advice is to contact your mortgage lender directly. They will be able to talk through your options with you: remember that it is in their best interests to help you as best they can, so you may find that they are able to help you find a viable solution to your problem, at least in the short term.

 Does now feel like the perfect time to follow your own dream of Spanish home ownership? Looking for your next big adventure? Why not get in touch with our local property experts, who are perfectly positioned to help you turn your dreams into a reality. There’s no better time to start your property search than today!