Any natural person borrowers who, as a consequence of the health emergency caused by COVID-19, find themselves in a situation of economic vulnerability may request the deferral.
It is necessary to differentiate the different kinds of debt, as the application procedure may vary:
- Mortgage Debt: loans and credits with mortgage security meant for:
i. the purchase of main residences;
ii. rental homes, more specifically homes other than the main residence that are rented out and from which the mortgage borrower (the natural person who is the owner and landlord of said homes) no longer receives rental income since the entry into force of the state of alarm decreed by Royal Decree 463/2020 of 14 March or who ceases receiving said rental income up to one month after the end of the state of alarm;
iii. properties assigned to economic activities performed by businessmen and the self-employed, who are natural persons and fulfil the conditions envisaged in Article 5 of Act 37/1992 of 28 December on Value Added Tax.
- Non-Mortgage Debt: loans and credits without mortgage security (including credit cards).
According to the provisions set forth therein, the economic vulnerability requirements which must be fulfilled to be eligible for the debt deferral are the following:
a) That the borrower becomes unemployed or, in the case of businessmen or self-employed professionals, suffers a substantial loss of their income or a substantial fall in their invoicing of at least 40%.
b) That, in the month preceding the request for deferral, the overall income of the family unit's1 members did not exceed:
i. In general, the limit of three times the monthly Public Income Indicator for Multiple Purposes (hereinafter "IPREM"2); that is to say, €1,613.52.
ii. This limit shall be increased by 0.1 times the IPREM for each dependent child in the family unit. The increase which applies for each dependent child shall be 0.15 times the IPREM in the case of single-parent family units.
iii. This limit shall be increased by 0.1 times the IPREM for each person aged over 65 who is a member of the family unit.
iv. Should any of the family unit's members have a declared disability level equivalent to or exceeding 33%, a situation of dependence or a certified illness that incapacitates them from performing a work activity on a permanent basis, the limit envisaged in subparagraph (i) shall be four times the IPREM, without detriment to any cumulative increases for dependent children.
Should the borrower be a person suffering from cerebral paralysis, a mental illness or an intellectual disability having a recognised disability level equivalent to or exceeding 33%, or be a person suffering from a physical or sensory disability having a recognised disability level equivalent to or exceeding 65%, as well as in the case of people suffering from a certified severe illness which incapacitates the person or their carer from performing a work activity, the limit envisaged in subparagraph (i) shall be five times the IPREM.
c) In any cases where they have taken out a mortgage loan, that the mortgage repayments plus expenses and basic utilities exceed or are equivalent to 35% of the net income received by all the family unit's members.
"Expenses and basic utilities" shall be construed to mean the amount of the cost of electricity, gas, heating oil and running water utilities, along with the cost of landline and mobile telecommunications services and condominium fees. Solely the services supplied to the family unit's main residence shall be deemed "expenses and basic utilities".
d) That, as a consequence of the health emergency, the family unit has suffered a significant alteration of its economic circumstances in terms of the effort needed to pay for the home. It shall be construed that this circumstance has come about where the effort accounted for by the mortgage burden in relation to family income has been multiplied by at least 1.3.
For any requests for a non-mortgage debt deferral, the following considerations must be taken into account concerning subparagraphs (c) and (d) above for the purpose of making the calculation:
- If the borrower is also the beneficiary of a mortgage debt deferral, its application shall not be taken into account.
- If the borrower does not have a mortgage but does have a rented main residence and/or personal loans from financial institutions:
i. A far as subparagraph (c) is concerned, the amount of the mortgage repayments shall be replaced by the total sum of said amounts, including rent even though it may be subject to deferral.
ii. As far as subparagraph (d) is concerned, the total sum of said amounts shall be used for the purpose of calculating the mortgage burden.