Moratorium on mortgages and other loans due to COVID-19
The RDL 11/2020 of March 31 has modified and expanded the measures initially provided for in RDL 8/2020 of March 17 in relation to the mortgage moratorium. The following advantages result from the combination of both standards.
Cases in which a moratorium can be requested
Debtors (borrowers, guarantors and guarantors) who are in a vulnerable situation due to the coronavirus can request a moratorium from the creditor:
- In mortgage-backed loans arranged by individuals for the purchase of:
- Habitual residence.
- Property owned by the self-employed, businessmen and professionals who are involved in their economic activity.
- Dwellings other than the usual one for rent in which the owner has stopped receiving income from the declaration of the state of alarm until one month after the end of it.
- In other credits or loans without mortgage guarantee.
Those who cumulatively meet the following requirements will be considered to be in a situation of economic vulnerability as a result of the health emergency caused by COVID-19:
- Be unemployed or, if you are a businessman or professional, suffer a loss of income or turnover of at least 40%.
- That the total income of the family unit does not exceed, in the month prior to the moratorium request, in general, the limit of three times the monthly Public Indicator of Multiple Effects Income (hereinafter, IPREM), This limit is increased depending on the members of the family unit, situations of disability or recognized dependency.
- That the mortgage payment, plus the consumption of electricity, gas, diesel for heating, running water, fixed and mobile telecommunication services, and homeowners association fees, is greater than or equal to 35% of the net income received the set of members of the family unit.
- That, as a consequence of the health emergency, the effort represented by the total mortgage burden on family income has multiplied by at least 1.3.
In the case of credit agreements, certain specialties are established with respect to the indicated requirements.
To make the mortgage moratorium and rental moratorium compatible, an adapted accreditation regime is established by virtue of which (i) the application of a possible mortgage moratorium will not be taken into account or rent for the purposes of calculating whether or not the limit of the mortgage charge or rental rent of 35% of income has been reached; and (ii) the case of those who, not having to deal with mortgage or rental debts, must deal with one or several loans that represent more than 35% of their income.
Advantages of a moratorium on mortgages
Those who take advantage of this moratorium will achieve the following effects:
- The suspension of the payment of installments, including interest and amortization of capital, for 3 months, a period that can be extended by the Government.
- Suspended installments should not be settled after the suspension ends, but all future payments should be postponed for the duration of the suspension.
- During the suspension, no interest accrues.
- The lending institution may not give up the loan during the suspension period.
By the mere request of the moratorium, it is possible to suspend the payment of the loans, without the need for approval by the creditor.
The expenses of documenting this moratorium in a public deed will be borne by the creditor.
How to get the moratorium?
To obtain these advantages, the interested party must request the moratorium in writing.
The deadline to submit this application is, in the case of mortgages, 1 month and 15 days after the end of the state of alarm. In loans without a mortgage guarantee, the term is reduced to 1 month from the end of the state of alarm.
The application must be accompanied by documentation that demonstrates the situation of vulnerability. If it is not available, it can be replaced by a responsible declaration without prejudice to presenting it later up to 1 month after the end of the state of alarm.
LEGAL ADVICE AGAINST COVID-19
We make available to all our clients a comprehensive legal advice service in the face of the crisis generated by covid-19 for companies, the self-employed, workers and those affected by contagion. For this, we have a team of lawyers specialized in commercial, labor, bankruptcy and compensatory valuation prepared to provide 360º solutions.