The unstoppable rise of Euribor has put many families with variable-interest mortgage loans against the ropes. The reference index has gone from negative to close to 3% in a few months. To avoid the burden this entails for the most vulnerable families, the Government of Spain has approved a package of mortgage aid.
These measures, which will benefit close to a million households according to official forecasts, will come into force at the beginning of 2023. Although these actions were agreed with the banks, it is up to them to adhere to the so-called Code of Good Practice.
Aid for mortgages according to income
There are two large sections of measures depending on the vulnerability of the families. Each of them has particular requirements, and the aid also varies. We explain them below.
Measures for the most vulnerable
The first package of measures is for families with an income under 25,200 euros. If they dedicate more than 50% of that income to the mortgage payment and have increased the mortgage effort by more than 50%, they will be able to benefit from the following aid:
• Reduction of the applicable interest rate during a 5-year grace period. The Euribor gets lowered from the current +0.25% to -0.1%.
• Families may request debt restructuring on more than one occasion.
• The period for requesting the dation in payment of the habitual residence is increased up to two years.
• Households in a situation of eviction will see the period for applying for social rent in their own home extended from 6 to 12 months for a maximum amount of 3% of its value.
Vulnerable households that have suffered a mortgage burden of less than 50% may also benefit from mortgage aid:
• They may request a grace period of two years, with a lower interest rate during that period.
• They may request a 7-year increase in the mortgage to lower the monthly fee.
Mortgage aids for medium incomes
This Code of Good Practices includes households with an income under 29,400 euros (3.5 times the Public Indicator of Multiple Effects Income). The mortgage payment must represent at least 30% of the wages, while it must have increased by a minimum of 20%. In this case, the aid for mortgages is different:
• Freezing of mortgage payments for one year.
• Reduction of the interest rate on deferred money.
• Option of extending the mortgage for seven years.
Other applicable measures
The mortgage aid plan contemplates other measures. Specifically, easing the change from variable to fixed mortgages by reducing expenses and eliminating commissions for early repayment.
To make the most of these mortgage aids, you will have to go to the bank. If it has adhered to the Code of Good Practices, you'll have to negotiate the most appropriate help in your case.
This package of measures applies to mortgages signed before December 2022. If you're seeking a new home, remember that at Spainhouses.net, you will find the best real estate offer.