Mortgage moratorium

Mortgage moratorium in the wake of the COVID-19 crisis

On this page we explain how you might be affected by the new Royal Decree-Law 8/2020, of 17 March 2020, enacted by the Council of Ministers and published in the Official State Gazette [BOE] of 18 March 2020 (and subsequent updates in the BOE), on measures to qualify for the mortgage moratorium.

See Who is eligible for the mortgage moratorium? Who is eligible for the mortgage moratorium?

Who is eligible for the mortgage moratorium?

The aim of the mortgage moratorium introduced in the wake of the COVID-19 crisis is to provide assistance to borrowers for the following:

  1. Primary residence.
  2. Properties subject to economic activity carried out by business people and professionals.
  3. Homes other than the primary residence held for rent where the owner has ceased to receive the rental income since the state of emergency entered into force (Royal Decree 463/2020 of 14 March 2020) and it will not be renewed until one month after it ends.

Borrowers who qualify as economically vulnerable and whose loan is in effect upon the entry into force of the new Royal Decree-Law.

In addition to providing protection and assistance to borrowers in this situation, the moratorium also applies to the guarantors or sureties of the main debtor subject to the same conditions as the holder of the mortgage.

Guarantors, sureties and non-obligor mortgagors who qualify as economically vulnerable may insist that the bank first exhaust the assets of the principal debtor, who will remain subject to the measures provided for in the Code of Good Practices, before it may claim the secured debt from such persons, even if in the contract they had expressly waived their right to insist that the lender first exhaust the assets of the principal debtor.

See What qualifies as economically vulnerable? What qualifies as economically vulnerable?

What qualifies as economically vulnerable?

The following situations and circumstances qualify as economically vulnerable as a result of the health emergency triggered by COVID-19:

  • Where the holder of the mortgage loan has become unemployed or, if self-employed, has suffered a substantial loss of income or a substantial decline in sales (this decline must be at least 40%).
  • Where the combined income of all members of the family unit (comprising the income of the holder of the mortgage loan, of his or her spouse or registered partner —insofar as not legally separated— and of their children, regardless of age, who reside at the family home, including those persons linked by a relationship of guardianship or foster care and their non-legally separated spouse or registered partner, who also reside at the family home) does not exceed, in the month prior to the application for the moratorium: 
  1. In general, the limit of three times the monthly public income index (known as IPREM) (1) .
  2. This limit will be increased by 0.1 times the IPREM for each dependent child within the family unit (0.15 times if the family unit is single-parent)
  3. This limit is increased by 0.1 times for each person aged over 65 who is a member of the family unit.
  4. If any member of the family unit has a declared disability of more than 33%, a situation of dependency or illness that renders him or her permanently unable to carry out any kind of work, the limit will be four times the IPREM, without prejudice of any accumulated increases per dependent child;
  5. The limit will climb to five times the IPREM if the mortgage borrower is a person with cerebral palsy, mental illness or intellectual disability with a recognised degree of disability equal to or exceeding 33%, or a person with physical or sensory disability with a recognised degree of disability equal to or exceeding 65%, or where they are able to prove that they have a serious illness that renders them or their carer incapable of performing any work.
  • Where the amount of the mortgage instalment, plus basic expenses and living costs, equals or exceeds 35% of the net income received by all members of the family unit.
  • Where, as a result of the health emergency, the family unit has suffered a significant change in its economic circumstances in terms of the effort needed to acquire and retain the home, i.e. when the mortgage burden to family income has multiplied by at least 1.3 times.
  • IMPORTANT: All the requirements described above must be met to be eligible for the moratorium.

See How do I apply for and get a payment holiday? How do I apply for and get a payment holiday?

How do I apply for and get a payment holiday?

If you meet the requirements, you can apply for a payment holiday on the mortgage for your primary residence up to 15 days after the expiry of the Royal Decree-Law (the current duration is one month but the government may decide to extend it).

Steps to submit an application:

  • Download and fill in the documents you need to present to Bankinter:
  • Once you've prepared all these documents, contact your branch or manager.
  • After you've submitted your application and all the necessary documents, Bankinter will check that everything is in order.
  • This marks the beginning of the application analysis period. You'll receive our reply within 15 days.

See Proof of subjective requirements Proof of subjective requirements

Proof of subjective requirements

The loan holder loan must prove to the Bank that they are vulnerable, as described above, by presenting the following documents:

  1. If legally unemployed, by presenting a certificate issued by the authority responsible for processing unemployment benefits and showing the monthly amount received in unemployment benefits or aid.
    • You can get this certificate from the electronic headquarters of the Public State Employment Service (SEPE). This is the link.
  2. Self-employed workers who are no longer working or trading must present a certificate issued by the tax office or other competent body of the autonomous community in question, confirming the cessation of trading declared by the subject.
    • You must request this certificate through the State Tax Administration Agency or the competent body of the autonomous community.
  3. Number of people living at the home:
    • Family book (libro de familia) or document confirming the existence of a common law relationship.
    • Municipal registration certificate for all people registered as living at the home, relating to the time the supporting documents were presented and also the previous six months. You can request this certificate at the municipal council in your province (many accept requests by phone, online or by regular post).
    • Declaration of disability, dependency or permanent incapacity to carry out any kind of work.
  4. Ownership of the assets:
    • Non-certified copy issued by the index unit attached to the Property Registry (Registro de la Propiedad) showing all members of the family unit. You can request this by email to the property registry where your primary residence is registered or, where appropriate, to any of the registries in the town or city where your primary residence is located. You must attach a photocopy of the national ID card of the person about whom the information is issued or, where appropriate, of all the members of the family unit. Click this link to go to a list of email addresses of all property registries.
      For more information, you can also consult the guide prepared by the Land and Mercantile Registrars Association of Spain.
    • Deed of purchase of the property and mortgage agreement.
  5. Sworn statement by the debtor or debtors confirming that they meet the relevant requirements to qualify as not having sufficient economic resources.
  6. Owners of a property for rent for which a mortgage moratorium is requested (only if the rental income has ceased since the the state of emergency entered into force - Royal Decree 463/2020 of 14 March 2020 - and will not be renewed until one month after it ends) must provide the rental agreement.

See What exactly are the effects of the mortgage moratorium? What exactly are the effects of the mortgage moratorium?

What exactly are the effects of the moratorium?

If you meet the requirements and are a granted a mortgage moratorium, the obligation to meet your next three monthly mortgage payments will be suspended and your mortgage term will be extended by three months.

For the duration of the moratorium, your mortgage debt will be suspended and the early maturity clause stated in the mortgage agreement will no longer apply. During this time, the Bank will not be able to demand payment of the mortgage instalment or any of the associated components (repayment of principal or payment of interest), whether in full or as a percentage. 

Pursuant to the provisions of Article 13.3 of Royal Decree-Law 8/2020 (according to the wording in the first additional provision of Royal Decree-Law 11/2020, of 31 March), the application of the suspension will not require agreement between the parties or any contractual novation for it to take effect, but it must be formalised in a public deed and registered in the Property Registry. Accordingly, once the public deed has been drawn up (and once full freedom of movement is reestablished), you will need to appear before a notary to formalise the deed and the failure to do so will be considered a serious breach of the requirements to benefit from this moratorium. You will not incur any notary costs for the formalisation of the moratorium deed.

See Non-application of late-payment interest Non-application of late-payment interest

Non-application of late-payment interest

No default or late-payment interest will accrue for as long as the moratorium remains in effect in the case of all loan or credit agreements secured with a mortgage charge over property in which the obligor is able to prove that he or she qualifies as economically vulnerable.

This suspension of interest will have no effect whatsoever on debtors or contracts other than those governed by the new Royal Decree-law.

See What are the effects on the borrower of the improper application of the moratorium measures? What are the effects on the borrower of the improper application of the moratorium measures?

What are the effects on the borrower of the improper application of the moratorium measures?

Any holder of a loan or credit facility secured with a mortgage who unduly benefits from the moratorium measures contained in the Royal Decree-law without meeting the eligibility requirements will be held liable for any resulting damage or loss and for all expenses incurred from applying these mortgage easing measures, without prejudice to any other liability that the debtor's conduct may generate.

The amount of the damage, loss and expense cannot be less than the benefit unduly obtained by the debtor in seeking to have the new measures applied in their case.

Any debtor who voluntarily and deliberately attempts to bring themselves within the threshold of economic vulnerability in order to qualify for these measures will also be held liable. The bank or entity to have granted the loan or credit will have the burden of proving this circumstance.

See Royal Decrees published in the Official State Gazette [BOE] Royal Decrees published in the Official State Gazette [BOE]

BANKINTER MORTGAGES PAYMENT HOLIDAY

Not eligible for a payment moratorium? Find out about Bankinter's special payment holiday for mortgages

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