Could you – or someone you know – be eligible for a pay out from the Spanish banks? With billions of euros set aside to compensate the victims of mis-sold mortgages, see if you could be in line for a windfall.
The Spanish property industry has come a long way in the past few years, especially since the financial crisis.
Spain’s banks, in particular, offer more protections for buyers than ever before, especially when it comes to mortgages.
Spain’s financial authorities are actively making amends for those prior irregularities, with simple compensation processes for anyone who can prove they were mis-sold products. Spanish banks, including well-known institutions, have allocated nearly €4 billion for claims.
See if you could be eligible to make a claim
So, if you purchased property in Spain between 2000 and 2016, using a Spanish mortgage, you may be eligible for compensation.
This article is essential reading for anyone who has taken a mortgage in Spain during this era, whether paid off or still paying, irrespective of whether you still own the property, or for friends or family members who have. You may be entitled to significant compensation for what has transpired. Please forward this article to anyone you believe may have been affected.
There are three main grounds for making a claim. These come under the titles of IRPH claims, floor clauses and mortgage expenses. All have been judged by Spain’s supreme court, supported by European Court of Justice, to be “abusive clauses”.
IRPH claims
The IRPH (Índice de Referencia de Préstamos Hipotecarios) is a reference interest rate used by Spanish banks. This often leading to higher monthly payments compared to the more commonly used EURIBOR. Many homeowners were unaware of how IRPH impacted their mortgage payments when signing agreements.
In a pivotal ruling last year, the European Court of Justice (ECJ) determined that IRPH clauses could be classified as abusive if financial institutions did not provide transparent information about the calculations and implications associated with the index. This ruling now allows borrowers to contest their mortgage terms, potentially forcing banks to replace IRPH with more favourable indices such as Euribor.
Notably, in January 2025, a court in Arrecife declared an IRPH clause null, ordering the reinstatement of Euribor as the reference rate and requiring the bank to refund overpaid interest. Additionally, there is currently no statute of limitations for initiating claims, meaning that even individuals who have since paid off their mortgages may still seek restitution.
Floor clauses
The so-called “floor clause” (or “Cláusula Suelo”) establishes a minimum interest rate for variable-rate mortgages. Many borrowers were not adequately informed about these clauses, resulting in situations where even as benchmark rates fell, homeowners continued to pay inflated interest rates.
This issue became particularly evident after the 2009 financial crisis when European interest rates plunged to historic lows. Despite this, borrowers with floor clauses were stuck with high monthly payments. If you suspect that you were affected, there may be grounds for reclaiming the extra interest paid.
Which banks sold mortgages with a floor clause?
Floor clauses gained significant scrutiny following the financial crisis, yet many leading Spanish banks continued to use these types of mortgages until they were phased out entirely in May 2013.
Santander was one of many Spanish banks that mis-sold mortgages (Manuel Esteban / Shutterstock.com)
Notable institutions associated with these mis-sold mortgages include Santander (including Banco Popular y Banesto), BBVA (including Caixa Catalunya), CaixaBank (including Bankia, Mare Nostrum, Caja Murcia, etc.), Unicaja (including Liberbank), Sabadell (including CAM), Banca March, Kutxabank, Cajamar, Ibercaja, Abanca BBVA, Banco Sabadell, Caixabank, Cajamar, Banco Popular, and Liberbank.
For a thorough list of implicated banks, you are encouraged to visit the JLCA website.
Many variable-rate mortgages included interest caps of 3% to 5% due to these floor clauses, meaning even when the Euribor dipped to around 0.4%, borrowers continued to overpay compared to those without restrictions.
Reclaiming mortgage setup expenses
Alongside interest rates, many Spanish banks historically levied various fees on borrowers for mortgage setup, including notary fees, land registration charges, administrative fees, and property valuations. Courts have ruled these practices as abusive, allowing affected borrowers to seek refunds.
Recent judicial findings confirm that:
- Notary fees are to be shared equally between banks and borrowers.
- Land registration and administrative costs are the bank’s responsibility.
- Property valuation fees are refundable if the bank mandated the valuations.
Importantly, the Spanish Supreme Court clarified that claims for these expenses are not subject to time limits, provided that the relevant clauses were not previously nullified.
How much could I claim?
The compensation owed by banks varies based on multiple factors including loan conditions (such as the capital drawn and repayment duration) and the specifics of the floor clause (e.g., whether it was set at 3% or 5%) alongside its duration. For example, a mortgage of €150,000 taken out in 2006 with a 5% floor clause could allow the borrower to potentially recover up to €20,000 plus interest.
Who can claim?
Anyone who suspects they were mis-sold a Spanish mortgage featuring a floor clause is entitled to claim. Initially, refunds were limited to interest overpayments from 2013 onwards, but a significant ruling by the European Court of Justice in December 2016 eliminated any time limitation on claims, allowing borrowers to recover all excess interest paid.
To successfully initiate a claim, one must demonstrate that the floor clause was inadequately disclosed at the time of mortgage origination. Evidence might include the clause being hidden in the fine print. It is also noteworthy that currently there are no time limits on claims, which enables individuals who repaid their loans even in recent years to seek restitution.
JLCA offers free case assessments and operates on a no-win, no-fee basis, ensuring financial barriers do not inhibit you from pursuing compensation for losses resulting from unfair floor clauses. For more detailed guidance through the claims process, contact JLCA today to explore how you can initiate your claim for what you are owed.
Frequently asked questions
How do I make a claim?
To review your potential claim, JLCA & AS Lawyers require a copy of your Mortgage Deed
How much money might I be entitled to?
This will depend on the size of the mortgage and how long it was held for. However, as an example, claiming under the IRPH criteria, an average mortgage of €150,000 over 20-25 years, the consumer could claim between €20,000 and €30,000.
What is my first step?
Don’t delay! Your first step will be to make an enquiry with our legal partner JLCA and As Lawyers.
What if I can’t find the right document?
It will certainly make your claim faster if you do have your Mortgage Deed to hand. However, JLCA can usually help you source the relevant documentation.
Are there any upfront payments
No, JLCA work on a no-win, no-fee basis. However, there would be a Notary fee for the required Power of Attorney, although this is only required AFTER you have established you have a claim and confirm you wish to pursue the claim.
Will I have to travel to Spain?
It is highly unlikely that you will need to travel to Spain. Procedures can be followed via power of attorney.
Suppose I still own the property and am still paying the mortgage?
No problem. You can claim in the following situations:
- If you still own the property and are paying the Mortgage.
- If you still own the property but have already paid off the Mortgage.
- If you sold the property and paid off the Mortgage.
