State of alarm and moratorium on mortgage payments

What is the moratorium and to whom is it addressed?

The application of Royal Decree 8/20 of extraordinary urgent measures to deal with the economic and social impact of Covid-19 establishes measures to seek a moratorium on mortgage payments.

It should be borne in mind, however, that this measure is an extension of the time for payment of the debt, and is limited to mortgages that are intended for the acquisition of habitual residence. In addition, this mortgage or loan must be secured or secured by a property. It is also necessary that the person obliged to pay is in a situation of economic vulnerability. But in addition, these circumstances of precarious economic situation can only be those contained in the same regulations and must be given at the time this law was agreed.

In summary we can say that these requirements are:

  1. Being unemployed or being self-employed or professional and having a very significant drop in income.
  2. That the total income of the family unit has not exceeded in the previous month an amount that will vary depending on the circumstances of each family.
  3. That the mortgage installment, plus basic expenses and supplies, be equal to or greater than 35 percent of the family’s total net income.
  4. That as a result of the health emergency the family is affected in their effort to access the home.

Many families are affected by the economic consequences of the confinement imposed by the state of alarm; but, nevertheless, they do not meet the requirements of this moratorium, either because the credit requested is to boost the business, to pay for the education of the children, to settle the debts that were still arising from the previous economic crisis, etc.

In all these cases, it will be necessary to renegotiate with the bank in order to have access to another type of deferral. In the case of people who are in a vulnerable situation, the bank can be asked to apply the Code of Good Practice (if the bank is a member) in order to restructure the debt, using different options.