Discover which are the most common abusive clauses of your mortgage

Through a mortgage, it is possible to obtain the loan that you need so much to buy a home or start a project.

Thomas Osborne
Thomas Osborne
16 November 2022 Wednesday 01:40
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Discover which are the most common abusive clauses of your mortgage

Through a mortgage, it is possible to obtain the loan that you need so much to buy a home or start a project. However, it is important that you carefully evaluate the contract agreements to rule out the presence of unfair terms. What could be some and how to claim them? We'll tell you then.

Abusive clauses in a mortgage are those whose existence has not been negotiated with the client individually. Rather, they are stipulations tacitly imposed by the financial institution. Sometimes they are hidden or formulated in ambiguous language that is difficult to understand.

The official regulations used to determine the irregularity of a clause are included in Directive 93/13/CEE of the Council, as well as in the General Law for the Defense of Consumers and Users. The abusive nature of a mortgage clause must be ruled by a judge.

If a clause is included by the financial institution without clearly explaining its existence to the client, it could be considered abusive. The same occurs with any stipulation that causes harm to the client, lacking his rights or leaving him in a position of vulnerability. In all cases, the affected party is fully entitled to claim mortgage expenses.

Decades ago, it was common for banks to include various types of clauses in their mortgage contracts that were later classified as abusive. Some of the most frequent are the following:

Perhaps the most common of all, is the one in which the bank establishes a minimum interest (floor) of a fixed rate even when the loan is at a variable rate. Thus, even if the mortgage reference level (usually the Euribor) went to a minimum, the bank applied the floor clause so as not to lose benefits. Mortgages did not go down despite being linked to a reference that did.

When the floor clause does not meet the transparency requirement, the client has the right to complain. As a result, the mortgage debt is recalculated applying only the interest agreed in the contract plus its differential. In addition, the floor clause is eliminated and the bank will have to return to the client what he has paid in excess for his application.

Banks used to apply very high late-payment interest in their mortgage contracts, from 16% onwards. Both the Provincial Courts and the Supreme Court declared these percentages abusive. At present, the agreed interest on a mortgage loan cannot exceed three times the legal interest on the money.

This clause allows the bank to terminate the contract and start the foreclosure process when the mortgaged party does not pay several installments. In the past, banks could activate this clause even if the customer was late with a single installment. Currently, financial institutions can only repossess a home if the mortgaged party fails to pay a minimum of 12 installments.

The Supreme Court declared this clause abusive in 2015, which made the client responsible for paying all the expenses related to the deed of the mortgage loan. Among others, the client had to assume the costs of agency, notary, home appraisal and the Tax on Documented Legal Acts. (IAJD).

If you believe that your mortgage includes any of these abusive clauses, you can start a claim process to have them annulled. How to claim abusive clauses in a mortgage? At least, you have three options: