Bill would set requirements for mortgage floor clauses in Spain

Automatic summary, not yet reviewed

1. The bill sets requirements for floor clauses limiting interest reductions in mortgages on homes or on premises that are the borrower's main source of income: they must appear in a special section of the deed, be accepted before a notary with a clear explanation, and the borrower must sign that they understand them.
2. If both an upper and a lower limit are agreed, they must be proportional and set the same variation in both directions. The deed must also include simulations of interest rate scenarios and compare the cost with fixed-rate mortgages.
3. If those requirements are not met, the clause would be void and the lender would have to refund the amounts improperly charged for it.
4. For mortgages signed before the law takes effect, lenders would have six months to adapt the clauses to the new rules, unless the borrower expressly waives this. If six months pass without adaptation, the clause would be void and refunds would apply.

Who it affects

• People with a mortgage on their home or on premises that is their main source of income: Their floor clauses would only be valid if they meet the bill's requirements, and they could recover overcharges if they do not.
• Guarantors or non-debtor mortgagors: They too would have to accept the clauses before a notary for the clauses to bind them.
• Banks and other lenders: They would have to adapt old clauses within six months or refund amounts charged if the clause is declared void.

Words worth knowing

Cláusula suelo (floor clause)

A mortgage term that stops the interest you pay from falling below a set minimum.

Prestatario (borrower)

The person who receives the loan money, that is, who takes out the mortgage.

Fiador o hipotecante no deudor (guarantor or non-debtor mortgagor)

Someone who backs the loan or offers their home as collateral without being the one who borrowed the money.

Diligencia del notario (notary's note)

A note the notary adds to the deed recording what was explained and signed by each party.

Nulidad radical (full nullity)

The clause is treated as if it never existed and has no effect.

It summarizes the text as it was introduced. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries