View Full Version : Has anyone mortgage payments gone down recently?

04-13-2009, 09:36 AM
My mortgage is up for review at the end of May and we are really hope that there is a drop in the rate that we pay. Currently we are paying 6.25%! Has anyone else had a review recently and their payments have fallen?
Thanks and any advice or ideas on what our new rate could be would be great. Our mortgage is set at the euribor + 1%.


Lawbird Lawyer
04-13-2009, 10:05 AM
Dear Sir,

If your mortgage is going to be reset in May they will take Marchs' Euribor's average. The Euribor rate has dropped significantly over the last 7 months from its peak level in October 2008.

Having said this, in many mortgage deeds the drop in the applicable interest rate is capped. They are called "floor clauses" in Spanish. They are normally set at 3-3,5% minimum.

So regardless if the Euribor rate drops below the minimum, the interest rate applicable will be that set as the minimum benchmark.

Please read further:

Reduction in mortgage payments reduced by the floor clause (http://belegal.com/blog-by-antonio-flores/reduction-in-mortgage-repayments-limited-by-floor-clause/) March 18th, 2009 @ 10:03 by aflores

Quoting ourselves from another thread (http://www.marbella-lawyers.com/forums/showthread.php?t=119&page=2):

04-03-2009, 04:41 PM

Additionally many lenders include clauses in the Mortgage deed by which you cannot pay less than a minimum amount of interest (to which the differential usually averaging 1% for non-residents must be added).

The same as Mortgage deeds are capped with the maximum amount of interest payable (normally it's around 10% p.a. max) there is also a limit as to how little you can pay interest (a minimum payable interest rate).

When I started this thread it was done with the intention that borrowers realized that within the next months on their interest rate resetting they were going to pay considerably less a month. But some borrowers have been carried away and are now expecting to pay on their next review less than 2% or 3% p.a. interest and many of them are set for a nasty surprise as this will just not happen.