Your Guide to Better COVID-19 Mortgage and Loan Conditions

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The global pandemic has had wide-reaching economic consequences and many governments have introduced measures to help people in financial difficulty.

In Spain, these include better COVID-19 mortgage and loan conditions. In this article, we look at what options you have to take advantage of the best.

Why are there better loan and mortgage conditions during COVID-19?

Reduced economic activity in general and lockdown, in particular, have affected millions of people in Spain. One of the government’s priorities is to prevent homeowners in financial difficulty from going into default on their loans, mortgage or personal.

What measures has the government introduced?

When the country entered lockdown, the authorities introduced better covid-19 mortgage and loan conditions in Spain. However, to benefit from the measures you need to fulfill stringent requirements.

As a result, few people can actually take advantage of them.

What about the banks?

Unlike the previous financial crisis when banks appeared to have little regard for their clients’ personal economic circumstances, this time financial entities in Spain have thought about their customers.

Many banks have introduced better conditions for mortgages and personal loans in Spain, designed to make repayment easier and to avoid default.

What are the main measures?


Many banks are offering interest-only repayments for clients with mortgage and/or personal loans. They’re available in the following cases:

  • If you’re unemployed because of covid-19.
  • You have been furloughed because of the current crisis.
  • Your business has had to close because of the state of alarm in Spain.

Banks are typically offering interest-only repayments for a minimum of four months with some extending this to a maximum of 12.

Delayed payment

Some banks are allowing clients to take a moratorium on their repayments, also known as a mortgage or loan ‘holiday’. In some cases, this is for up to six months. The exact period depends on the individual bank.

Did you know?

Costaluz Lawyers have been successfully helping foreigners get the best deal from Spanish banks since 2006. Get in touch for a free consultation to find out how we can help negotiate the best possible terms for you from your bank in these challenging times.

What are my options for better mortgage and loan conditions in Spain?

The best solution for you to avoid default on repayment of a mortgage or personal loan will depend on your personal circumstances. Here are three possible alternatives:

Extend your mortgage loan

One way to reduce mortgage repayments in Spain is to negotiate a longer loan term. For example, if you currently have a mortgage for 10 years, you can look into extending this to 15 or 20 years. If you change to 15 years, your monthly repayment should go down by around one third.

The same applies to personal loans, although be aware that your bank may not be open to extending the duration on this type of loan.

Ask for interest-only

Paying just the interest on your mortgage drastically reduces the amount you have to pay every month. And as we’re stated earlier, some banks are offering this option for up to 12 months. Bear in mind, however, that when you return to capital and interest repayments, the amount payable each monthly will go up slightly.

The same is true of personal loans.

Request a moratorium

Your third option is to ask your bank to consider a moratorium for your loan. The advantage of this option is that you’ll have complete peace of mind because you won’t go into default during the moratorium.

On the other hand, once the mortgage ‘holiday’ is over, your monthly repayments will increase slightly and your total outstanding debt will be higher.

Our top tips

Plan ahead – take a long hard look at your finances and if there’s a possibility that you might enter default, do something now. Don’t leave it too late.

Think about a combined solution – consider requesting interest-only payments as well as a longer repayment term for your loan, for example.

Check the small print – when negotiating new terms for your loan, make sure your bank sticks to all the previous conditions. Read the new contract very carefully and request the removal of any new additional clauses.

Get the best advice

We have years of experience in negotiating with Spanish banks. Contact us now to find out how we can help you.

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