The first and most important thing to know is that a floor clause (or Clausula Suelo) is some kind of minimal percentage that a bank incorporates in mortgages with a variable interest rate, so there is always a minimum amount of interest being paid, no matter if the market interest rate is lower.
The market rate is established by the Euro Interbank Offered Rate (or EURIBOR), and the difference between your rate and the market rate can be significant with a floor clause.
Today, this article by ShMadrid will share more information about floor clauses.
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Basic information about floor clauses
Floor clauses only affect mortgages with a variable interest rate, so mortgages with a fixed rate do not have anything to do with floor clauses, as in this situation a fixed monthly amount of interest is being paid.
When it concerns floor clauses, it is good to know that the European Court of Justice is on the consumers’ side, as it has declared in an official verdict that banks must refund floor clauses. This means that banks are legally obliged to pay back everything that has already been paid (too much), starting from the first instalment.
The Government has, through Royal Decree Law 1/2017 of January 20, established a free-of-charge procedure to resolve the process for clients, based on the verdict by the European Court of Justice.
What is best about this procedure, is that you do not have to go to court! The whole process can be handled within a maximum period of 3 months.
Next important fact, is that even mortgages that have already been paid back completely, are eligible for claiming back their floor clause. The Civil Code states, although this is not very clear for everyone, that your claim should be done within 15 years.
There are several ways to claim back your money. The first thing to do is lodge a complaint with your bank to claim back the amount that was overpaid because of the floor clause. The bank should then inform you of this amount. If you as a consumer agree with the amount, your refund will take place within a maximum period of 3 months.
It is also a possibility that your bank rejects your complaint, and then it will not calculate the amount. Some banks, unfortunately, have this reaction at first, because many people want to avoid having to go to court to get back their money.
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Another way to go about getting a refund, is to go to court directly. However, once you start this procedure, you will not be able to take advantage of the out-of-court procedure.
If your mortgage has (or had) a floor clause, it is extremely important not to sign anything from your bank without getting legal advice. Signing it could result in waiving your rights to undertake any other legal action.
There is not much information out there about the wrongfully charged amounts of money that have been claimed by clients. What we do know is that complaints that have been dealt with outside court are solved faster and more effectively, and as long as you follow this procedure, parties are obliged not to file any legal claims.
After starting the procedure that is completely free of charge for the customer, the bank, if it accepts the claim, will determine the amount to be refunded. The consumer can then either accept the amount that is calculated by the bank, or you can take your case to court. The calculation should include overpaid amounts, as well as corresponding interest.
In addition to previous information, parties can agree on the amount of compensation being paid out. The bank will decide on this compensation, and the client will then have a maximum of 15 days to decide whether to accept or not.
What else do you know about floor clauses? Any advice?