If you’re hearing about the changes made by the Spanish government regarding mortgage loans and don’t know if they’ll affect you too, this is your article! Whether you already have a mortgage or are applying for a new one, this information is for you!
If you already have a mortgage… Are you affected by the new mortgage law?
There are only two items that are retroactive:
- If you want to convert your variable rate mortgage to a fixed rate, now it will cost you less.
- The new law also establishes that, in the event of non-payment, the foreclosure periods change, with a minimum of 12 non-payments now being necessary, or a minimum of more than 3% of the unpaid capital. If the default arises during the second half of the mortgage term, the percentage of unpaid capital must be a minimum of 7%, or 15 monthly payments. The maximum delay interest rate is set at 3 points above the mortgage interest rate, i.e. if you paid 3% interest, in no case may a delay interest of more than 6% be charged.
If you are going to apply for a new mortgage… What changes are there?
- Mortgage expenses:
– To be paid by the bank:
Processing agency
Notary
Register
AJD Tax
– To be paid by the buyer:
The valuation
Your copy of the deed
The costs of agency, registration, notary and stamp duty must now be borne by the bank, and the buyer must only pay the valuation and his copy of the deed of sale.
- Consumer protection is increased:
Now it will be necessary to visit the notary twice, at least one day before the signing to receive free advice and answer certain questions. The notary cannot authorize the deed if the questions are not answered correctly and it is proven that you have received the information previously.
More information for the future mortgaged. The bank must provide you with the personalised conditions set out in the European Standardised Information Sheet (FEIN), a document which is a binding offer for a minimum of 10 days. At the same time, you must provide the Standardised Warning Form (FiAE), in which the most relevant clauses or elements are explained generically, a copy of the contract and, if the mortgage is variable, a separate document with the instalments that would have to be paid in various scenarios.
Any abusive clause that does not comply with the regulations will be declared null and void, i.e. there is no statute of limitations to denounce its abuse.
A new entity for resolving disputes related to mortgage loans arises, which will be responsible for processing complaints and claims in this sector.
- Early repayment will not have such a high cost:
Early repayment, whether total or partial, of the loan will be now cheaper. The following maximums are established and must be agreed between the client and the bank:
In a variable mortgage, the maximum commission can be one of these two options (to be agreed between the bank and the client):
0.25% only during the first three years of the life of the contract
0.15% only during the first five years of the loan term
After those three or five years, the commission is 0%.
In a fixed mortgage, the compensation can reach the following limits:
2% for the first 10 years
1.5% for the remainder of the term
- Moving to a fixed rate mortgage will have a maximum commission of 0.15% if it occurs during the first three years of the loan term, including subrogation changes.
- As mentioned above, the minimum number of unpaid repossessions increases to 12 in the first half of the term (or 3% of the principal), and 15 monthly payments in the second half of the term (or 7%).
- The bank may offer a reduction of interest in exchange for contracting certain products, but cannot force the customer to contract them. In other words, failure to contract a secondary product by the customer, such as mortgage insurance, cannot result in the bank’s refusal to grant the mortgage.
- It prohibits the application of a minimum interest, so banks may not incorporate a “floor clause”. However, by default a minimum rate of 0% is established for all mortgage loans.
