The UK has begun reopening its borders to countries including Spain, Italy, France and many others UK nationals frequently visit and even own second homes in. British holiday home buyers have favoured Spain for some time now, with thousands of properties along the Costa Del Sol owned by UK residents, who are now considering staying in their holiday homes should another lockdown be imposed.  

Financial concerns however are very real for many property owners and investors who have suffered monetary losses because of the global pandemic. It is therefore likely that some UK residents who own properties in Spain will need to look at remortgaging their houses and possibly run the risk of falling into arrears with their lenders in Spain.

The subject of mortgage contracts is a sensitive one for UK-based homeowners of Spanish properties, who have felt the full force of Spanish banks’ abusive behaviour in recent years. This is because Spanish banks have been imposing unfair mortgage deals on borrowers by contractually stipulating that the mortgage rate index known as IRPH be used.

The interest rates on IRPH are much higher and involve an additional cost to the consumer. The rates on these mortgages also did not fall as much when the European Central Bank cut borrowing costs.

However, a landmark decision in the European Courts of Justice (ECJ) handed down this year came as a huge relief to consumers who had been cajoled into using the IRPH index. The ruling has opened a new window of opportunity for landlords and investors to claim against the Spanish banks to recover the money they have
been overcharged.