The mortgage floor clause remains a controversial issue and a topic many borrowers want to understand clearly. Here you will find everything you need to know about this type of condition that was included in some mortgage loans.
What is a floor clause in a mortgage?
A floor clause is a mortgage condition that banks previously included in some contracts, preventing borrowers from benefiting from drops or fluctuations in the Euribor (the benchmark index commonly used by financial institutions to determine mortgage interest rates).
How the floor clause works and its impact on mortgage payments
The floor clause established a minimum interest rate limit on variable-rate mortgage loans (linked to the Euribor). This allowed banks to avoid applying certain decreases in interest rates to the monthly payments of customers with variable-rate mortgages.
How to know if your mortgage includes a floor clause
Now that you know what a floor clause is, you may want to check whether it is included in your mortgage. You can verify this by reviewing the following documents:
- The mortgage loan deed.
- Your bank statement, specifically the section labeled “interest rate.”
You can also contact your bank directly, as it is legally required to provide you with this information.
Can a floor clause be removed or claimed?
In 2013, the Spanish Supreme Court declared floor clauses null and void, and in late 2016, the Court of Justice of the European Union ruled that the effects of this decision should apply retroactively, considering these clauses abusive.
Following these rulings, many banks implemented measures to refund the money obtained through these practices, in some cases returning the full amount charged due to floor clauses in their customers’ mortgages.
Therefore, it is possible to request the removal of the floor clause and claim the amounts that should be refunded.
Frequently asked questions about floor clauses in mortgages
When were floor clauses banned in Spain?
The prohibition of floor clauses in Spain began after the Spanish Supreme Court ruling of May 9, 2013, which declared them null and void.
A subsequent ruling on March 25, 2015, also by the Supreme Court, raised the possibility of claiming the money retroactively. Later, the Court of Justice of the European Union ruling of December 21, 2016 clarified the legal framework and confirmed the right of consumers to submit claims.
Can I recover the money paid due to a floor clause?
Thanks to the rulings of the Spanish Supreme Court and the Court of Justice of the European Union, you can request the nullity of the floor clause in your mortgage contract and claim the money paid because of it.
Which banks applied floor clauses in their mortgages?
Some of the banks that included floor clauses in mortgage contracts were:
- Banco Santander
- BBVA
- CaixaBank
- Banco Sabadell
- Banco Popular
- Bankia
- Banco de Valencia
- Ibercaja
- Banco Mare Nostrum
- Liberbank
- Banco CEISS
- Laboral Kutxa
- Banesto
Do floor clauses affect fixed-rate mortgages?
Since fixed-rate mortgages are not linked to any benchmark index (monthly payments remain the same throughout the loan), floor clauses are not included in these types of contracts.