As part of the Spanish government's measure to help the public during the Coronavirus outbreak, Pedro Sanchez announced that there will be a moratorium (mortgage payment holiday) on mortgage repayments for families who have been financially impacted by the national shutdown.
In this article I will explain what the moratorium means and how you can assess if you are eligable for a mortgage holiday.
The information I give in the this video is an overview of the Royal Directive (Real Decreto-ley 8/2020).
The Effect of a Moratorium
If a moratorium is granted then the mortgage is effectively frozen for the period of the moratorium. During that time no payments need to be made and no interest is charged on the outstanding amount.
When the moratorium ends then the mortgage effectively picks up where it left off and the time during which it was frozen will be added to the end of the term.
To assess if you are eligable for a moritorium (mortgage holiday) you will need to follow the steps below.
I have added a simple online test at the bottom of the page that you can take to check if you are eligable, however I recommend reading this blog, or watching the video above before you take the test.
The Steps to Take
1. The Mortgage Must be for Your "Vivienda Habitual"
The mortgage must be your primary home, so unfortunately if it is a holiday home you are not eligible for the moratorium.
Furthermore if it is your permanent home but you do not have residencia then for legal purposes you will not be able to claim that it is your “vivienda habitual”
2. Is Your Income Below the Goverment's Limit?
If you have got this far then you need to look at you income. I won’t go into how the government have calculated the figure here but, in short, if your household income was more €1613.52 in the month prior to the application being made then you will not be eligible UNLESS you have dependent children or family members over the age of 65 living in the house, or, in some cases, if have a registered disability.
I know that at this point many people will be asking whether the total income figure is gross or net? - Unfortunately the directive does not specify. I can only make the assumption that the bank will interpret the directlive to mean your gross income.
3. Allow for Children and Members of the Household Over the Age of 65
If you are a two parent household have dependent children then you can increase the earning limit by €57.78 per child per month.
If you are a single parent household you can increase the limit by €80.68 per child per child per month.
For family members over the age of 65 you can increase the limit by €57.78 per adult per month
If you are registered disabled and permanently unable to work there are further dispensations available I will let go into them in detail here are they are quite complicated however if anybody wants more information please do contact me via my website and I will be happy to get the information to you.
4. Is Your Mortgage Payment Plus the Cost of "Basic Suppies" Equal to or Higher Than 15% of Your Household Income?
To be eligible the cost of your mortgage, plus the cost of basic supplies must be equal to or more than 35% of your household income…..
Unfortunately the directive does not define “basic supplies”. The interpretations I have seen, read that it to mean utilities (water, electricity, gas) and telecommunications.
4. Has the Financial Burden of your Mortgage Payment Increased by a Factor of More Than 1.3?
You need to demonstrate that the financial burden on the mortgage has increased by a factor of at least 1.3 as a result of the COVID-19 measures…..
You can use the following equation to calculate if this is the case
Total monthly house hold income prior to lockdown/Total monthly mmortgage payment prior to lockdown = A
Total monthly house hold income after to lockdown/Total monthly mortgage payment after to lockdown = B
A/B = The factor by which the burden of your Mortgage payment has increased.
If the result is more than 1.3 then you are eligible…
The Online Test
I have put together a simple online test that you can use to assess your eligibility.
What To Do If You Are Eligable.
My next article and Youtube video will explain the process that you need to follow in order to apply for a Mortage holiday.
Please either subscribe to my site below to recieve a notification when it is published, or subscribe to my youtube channel to be notified when the video goes live.
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