Mortgage: in general, they are one of the greatest economic burdens that many families bear. The Coronavirus is wreaking havoc on the economy in the short term, and predictably in the medium term, for which reason Royal Decree-Law 8/2020 comes to protect mortgage debtors in vulnerable situations.

Mortgage and its deferment in Spain due to Coronavirus: At Pérez Parras Economists and Lawyers, we advise our clients on the sale and purchase of properties, both from a legal and financial point of view, covering all their needs and interests.

An important novelty is Royal Decree-Law 8/2020, that provides for a deferment in the payment of mortgage payments for particularly vulnerable groups, who see their income decrease as a consequence of the health crisis of COVID-19.

Who may qualify for this mortgage deferment?

People who have contracted a mortgage loan (mortgage debtors) with respect to their habitual residence, who are in the cases of economic vulnerability defined by Royal Decree-Law 8/2020.

The guarantors and sureties of the main debtor can also take advantage of these measures, with respect to their habitual residence, under the same conditions established for the mortgage debtor.

Who is considered to be in a situation of economic vulnerability?

This Royal Decree-law defines that especially vulnerable groups may benefit from the deferment in the payment of mortgage fees. And it defines as especially vulnerable groups, that have been affected by the health emergency caused by COVID-19, the following:

 

a) Mortgage debtors who become unemployed or,

b) Entrepreneurs or professionals who suffer a substantial loss of their income or a substantial drop in their sales

c) Mortgage debtors when the total income of the family unit does not exceed, in the month prior to the request for deferment:

 

  1. The limit of three times the monthly Public Indicator of Multiple Effects Income (IPREM).This is:

                                  FAMILY UNIT INCOME SET ≤ 3 * IPREM

    • The limit will be increased by 0.1 times the IPREM per dependent child of the family unit.
    • The limit is increased by 0.15 times the IPREM per dependent child, in the case of single-parent family unit.
    • The limit is increased by 0.1 times the IPREM per person over 65 years of age who is a member of the family unit
    • The limit is increased by 4 times the IPREM -without prejudice to the accumulated increases per dependent child- when any member of the family unit has declared a disability greater than 33%, a situation of dependency or illness that permanently incapacitates them to carry out a work activity.
    • The limit increases the IPREM by 5 times when the mortgage debtor is a person with paralysis, mental illness, or intellectual disability, with a recognised degree of disability ≧ 33%, or a person with physical or sensory disability with a recognised degree of disability ≧ 65% , as well as cases of serious illness that incapacitates the person or his caregiver to carry out a work activity.

 

d) Persons with:

(MORTGAGE DEBT + EXPENSES + BASIC SUPPLIES) ≧ 35% of net income received by all the members of the family unit

e) Those that, as a consequence of the health emergency, the family unit has suffered a significant alteration in their economic circumstances in terms of effort to be able to purchase a property.

 

It is understood that:

  1. A significant alteration of the economic circumstances has occurred when: the effort that the mortgage burden on the family income represents has been multiplied by at least 1,3.
  2. There has been a substantial drop in sales when it is at least 40% of them
  3. A family unit is composed of: the debtor, his or her legally separated spouse or registered partner, and the children, regardless of their age, residing in the home, including those linked by a relationship of guardianship, tutelage or foster care and their non-legally separated spouse or registered domestic partner, residing in the home.

 

Deferral request:

It can be requested from March 19, 2020, up to 15 days after the end of the Royal Decree-Law 8/2020, once the alert state ends.

Don’t hesitate to contact Pérez Parras Economists & Lawyers Firm if you want to get more information about Coronavirus governmental support, and all legal matters concerned.