The way a variable-rate mortgage behaves often erodes buying power each month. When the European Central Bank raises rates, borrowers with adjustable loans see higher payments that can grow quickly. Even though take-home pay stays the same, the monthly mortgage bill climbs as Euribor and related indicators shift.
There is no need to panic. The Bank of Spain, the regulator responsible for the Spanish banking system and the health of financial institutions operating here, has issued guidance that may bring relief.
The ECB pointed to Royal Decree 19/2022, recently approved by the Congress, which introduced a package of measures designed to soften the impact of rising costs and higher interest rates on households through targeted fiscal policy.
For homeowners with a variable rate mortgage, several criteria determine eligibility for this relief program.
What do you need to claim relief if you have a variable mortgage?
The path to relief involves meeting a set of conditions. Each element is meant to verify the household’s ability to absorb higher payments while keeping a basic standard of living.
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First, the house financed with the assistance must be a primary residence and valued at less than 300,000 euros.
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The second criterion uses income as a gatekeeper: households with annual income under 29,400 euros may request support.
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Mortgage debt load should exceed 30 percent of income to qualify for relief.
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The mortgage must have increased by at least 20 percent due to the rise in interest rates.
What if you don’t meet any of the requirements?
Don’t worry about being left out. There are options available to ease the burden. One route is to freeze mortgage payments for up to 12 months, providing temporary relief and breathing room.
Another option is to convert a variable rate to a fixed rate, which can stabilize payments and may offer a predictable path forward. In some cases, lenders may extend the loan term to as much as seven additional years, reducing monthly obligations.
If rent is part of a household’s finances and annual income falls below 25,200 euros while mortgage payments exceed half of monthly income, a two-year grace period may be requested. This approach helps extend the loan maturity up to seven years while maintaining a more affordable payment schedule during the grace period.