Unfortunately, being mis-sold a mortgage is more common than you might think. Following the global financial crisis of 2008, a dramatic drop in Spanish interest rates led to many banks and financial lenders boosting their profits by failing to apply those lower rates to their customers.

While homeowners in Spain would normally benefit via lower monthly mortgage rates, this was not the case for thousands – if not millions – of property owners. These greedy businesses were taking advantage of their clients and making them pay higher rates during and following a global recession.

Thankfully, when these unscrupulous practices came to light, European and Spanish courts began to hold them to account. Many banks in Spain have since been ordered to repay the difference to the mortgage holders who overpaid thousands due to misleading advice and mis-sold financial products.

In loan contracts, Spanish banks used to charge borrowers 100% of the formalization expenses. However, in 2019, the Spanish Supreme Court declared this practice as abusive, indicating that the distribution of expenses should be as follows:

• Registrar’s fee for the registration of the mortgage guarantee: lending bank.
• Management fees: lending bank.
• Notarial fee for the deed of constitution of the mortgage operation: split equally.
• Appraisal expenses: lending bank.

Therefore, all those who assumed 100% of the above expenses are entitled to a corresponding refund from the bank. We have been told that the amount to be refunded for each loan can range from € 1,000 to € 1,500.

Secondly, it was also common for banks to include a floor clause that limited the downward adjustment of the applicable interest rate.

This mean that borrowers could not benefit from decreases in Euribor in loans with a variable interest rate. This clause has been declared null in cases where borrowers were not informed of its inclusion in the contract and its operation, which was the case in the majority of instances. In addition to its removal, clients have the right to recalculate their loan as if this minimum limit had not existed, with banks having to refund clients approximately € 10,000 to € 30,000, depending on the case.