If you took out a multicurrency mortgage to pay lower interest and over time your debt has increased uncontrollably, you’re not alone. This banking product, marketed without clear information, has led many clients to pay unaffordable installments and see their debt grow due to currency fluctuations.
For this reason, and as lawyers specialized in multicurrency mortgages and banking law, in this article we explain what these mortgages are, why they may be considered abusive, how to file a multicurrency mortgage claim and what the law and case law say about them. We also explain how much you could recover and the steps to defend your rights against the bank, without fear and with proper legal support.
What is a multicurrency mortgage and how does it work?
A multicurrency mortgage is a home loan contracted in a foreign currency, such as Japanese yen or Swiss francs, instead of euros. The main appeal of this product is the possibility of paying lower interest if the foreign currency remains weak against the euro or if its benchmark rate is lower than the Euribor. However, unlike a traditional mortgage, with a multicurrency loan, both the installments and outstanding debt fluctuate depending on the exchange rate of the chosen currency against the euro.
Although the borrower might initially save on interest, there is a risk that the outstanding debt could increase significantly if the foreign currency strengthens against the euro—even after years of making payments. On top of that, these loans often include specific clauses such as a currency exchange fee and a compensation clause, which can increase the total cost.
Impact of currency fluctuation on debt
Currency fluctuation against the euro is the main risk factor in multicurrency mortgages. When the chosen foreign currency depreciates against the euro, the borrower may benefit from lower monthly payments, since fewer euros are needed to cover each installment. However, if the foreign currency strengthens, the opposite occurs: both monthly payments and outstanding debt can increase significantly.
For example, if a €60,000 mortgage is taken out in yen at an exchange rate of 0.01 euro/yen (6,000,000 yen), and the exchange rate rises to 0.02, the installment in euros would double, even though the amount in yen remains unchanged. Additionally, if after several years the exchange rate spikes, the outstanding capital in euros can greatly exceed the initial loan amount, leading to a difficult-to-manage debt situation.
Why can multicurrency mortgages be considered abusive?
Lack of transparency in marketing
Numerous banks offered multicurrency mortgages without clearly and understandably informing customers about the risks of currency fluctuation and the impact on their debt. This lack of transparency constitutes a breach of consumer protection regulations and the legal obligation to provide banking information, which can render these mortgages abusive products.
Since the entry into force of Law 5/2019, banks are required to inform the customer, via the European Standardised Information Sheet (ESIS), about how the cost of the mortgage would change if the foreign currency appreciates by 20% against the euro. They must also periodically notify changes in the outstanding capital, while also reminding the borrower of their right to convert the mortgage into euros at any time.
Relevant case law and judicial rulings
The Spanish Supreme Court and the Court of Justice of the European Union have issued rulings in favor of consumers, declaring the partial nullity of multicurrency mortgages due to lack of transparency, allowing conversion of the loan to euros and the reimbursement of overpaid amounts.
How to claim a multicurrency mortgage?
To initiate a multicurrency mortgage claim, the first step is to gather all relevant documentation:
It is essential to first review the contract terms, the currency exchange clauses, and payment statements.
The usual process begins with an out-of-court claim to the bank, requesting the partial nullity of the mortgage and conversion of the loan to euros. If the bank does not respond or rejects the claim, you can proceed with a legal action, where you will need to prove the lack of transparency and the economic harm suffered. Having the support of lawyers specialized in multicurrency mortgages and Banking Law is key to helping you collect documentation, review the contract, and prepare a strong claim that increases the chances of success.
Legal deadlines and specialized advice
The general deadline to claim the nullity of a multicurrency mortgage is 4 years from the moment the affected person became aware of the lack of transparency or the existence of the abusive clause.
It is important not to delay and to seek specialized advice as soon as possible, since interpretation of deadlines may vary depending on the case and current case law. A team of lawyers experienced in multicurrency mortgage claims will be able to analyze the viability of the claim, calculate the economic damage, and effectively defend your consumer rights against the bank.
How much money can be recovered from a multicurrency mortgage claim?
Through a multicurrency mortgage claim, it is possible to recover the overpaid amounts due to currency fluctuations, wrongfully charged interest and, in many cases, legal costs if the claim is successful.
The amount recoverable depends on the exchange rate evolution, loan duration, and total payments made, but successful cases show that from several thousand to tens of thousands of euros can be recovered.
Frequently Asked Questions
You have 4 years from the moment you became aware of the lack of transparency to initiate the claim. This period starts from when you knew about the lack of transparency or the existence of abusive clauses in your multicurrency mortgage. This deadline does not always coincide with the contract signing, but may begin when the affected party truly understands the risks and damages suffered, for example, after receiving clear information or a relevant court ruling.
Not all, but most can be subject to a claim if it is proven that the client was not adequately informed about the risks related to currency fluctuations and the impact on the debt. It is necessary to prove the lack of transparency during the sale and that the consumer did not fully understand the consequences of the contracted product.
The chances of success are high as long as it can be demonstrated that the bank failed to provide clear and understandable information. Currently, case law and court rulings tend to favor consumers in cases where it is evident that the client was not properly informed about the risks and functioning of the multicurrency mortgage.
It is not always necessary to go to court. In some cases, the claim can be resolved out of court if the bank accepts the partial nullity of the mortgage and conversion to euros. However, if the bank rejects the claim or does not respond, it will be necessary to take legal action to defend your rights and obtain the refund of overpaid amounts. Having lawyers specialized in banking law increases the chances of success in both scenarios.
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At BUFET GÓMEZ FERRÉ, we are expert lawyers in claiming multicurrency mortgages and in banking law: we analyze your case at no initial cost and advise you on recovering what is rightfully yours. If your mortgage was an abusive multicurrency mortgage, do not hesitate to consult us: we work on a success-fee basis, so the cost of our service depends on the success of the claim, with the peace of mind of being in the hands of specialist lawyers in banking claims.