What does the coronavirus mean for homeowners with a mortgage in Spain?

The Spanish Government is set to freeze mortgage payments for the main home of families affected by the coronavirus crisis.

Photo by Tierra Mallorca on Unsplash
Photo by Tierra Mallorca on Unsplash
26 March 2020, Emma Donaldson

Spain’s COVID-19 outbreak is continuing and in order to tackle the problem, the Spanish government, led by Pedro Sánchez, has approved an economic aid deal of 200 billion euros. These measures include a moratorium on mortgage payments for those who are most affected by the crisis, including workers and the self-employed (autónomos) who have lost at least 40% of their income, or are out of work, during the current state of alarm in Spain.

Who exactly is eligible for a moratorium?

In order to qualify, all the following requirements must be met:

  • The mortgage holder must become unemployed or, if he or she is self-employed, suffer a substantial loss of income (-40%) or a substantial drop in sales.
  • The mortgage in question must be for a main residence.
  • In the month prior to the moratorium, the total income of the household unit cannot exceed 1,613.52 euros (this is 3 times the monthly IPREM limit which is 537.84 euros, where IPREM is the reference indicator for determining social benefits in Spain).
  • The mortgage rate, plus basic household expenses and supplies, is greater than or equal to 35% of the net income received by all household members.
  • As a result of the current coronavirus health emergency, the family unit has suffered a significant alteration in its economic circumstances in terms of efforts to access housing.

How do I apply for a moratorium?

If all the conditions are met, then a family unit will be able to request the mortgage moratorium directly from their corresponding bank. Don’t forget that going to a financial institution is one of the exceptions for going out during the state of alarm but depending on your bank, this process may be possible online. To do so, you must present a series of documents:

  • In the case of an employee who has lost their job, you’ll need a certificate stating your unemployment situation and the monthly amount received as a benefit or subsidy. This certificate must be issued by the State Employment Service (SEPE).
  • You must also inform the bank of the number of people living in the home by submitting a copy of your family book (libro de familia) or census certificate (empadronamiento). Likewise, if there is a person with a disability, the disability certificate must also be presented.
  • Banks state that it is also necessary to show a “nota simple” from the property registry. This is something that all homeowners should already have as it is a necessary document to acquire a mortgage.

How long does the process take?

Mortgage holders who meet the requirements and have the relevant documentation may request a moratorium on loan payments until 15 days after the end of the state of alarm decree. Successful moratorium requests will lead to the subsequent suspension of the mortgage debt during the period stipulated, although for now, the government’s decree does not clarify maximum or minimum time periods.

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