THE TEN KEYS TO THE MORTGAGE LAW

What formalization expenses will be legally borne by the mortgagee?
Only the cost of appraisal, whose average price in Spain is around 300 euros. By law and for the first time in more than 20 years, financial institutions will have to pay the rest of formalization expenses. That is, the cost of notary, registry, agency and, the most important of all for its amount, the tax of Documented Legal Acts

Are some commissions cheaper?
Significantly lower the commission for early repayment, especially in the case of fixed rate loans. From now on, the surcharge applied by the bank may not exceed 2% of the amortized capital during the first 10 years and 1.5% if it is carried out later. In variable mortgages, the maximum commission will be 0.25% on the amortized from the third year or 0.15% if it is from the fifth.

What happens with the opening commission?
The new regulations do not limit this commission, but the so-called study commission is prohibited.

Can a bank oblige a customer to take out home or life insurance?
The financial institution can require the client to contract home insurance and / or life insurance or payment protection, but there is no obligation to do so. What it can do - in fact it is a frequent practice - is to apply bonuses in the loan differential for each product that subscribes with it.

Are sub-rogations tax free?
No, moving the bank loan will no longer be tax exempt. The expenses generated by the operation will be apportioned between the two financial institutions involved, depending on the duration of the loan and the time at which the subrogation occurs. In this way, it is intended to avoid that these mortgages are better treated fiscally than those of new formalization.

At what time can a bank call the so-called foreclosure?
When the mortgaged accumulates twelve months of non-payment. Until now it was three months. The bank and the client can incorporate into the contract the possibility of giving in payment if they freely agree.

Does the new regulation in any way encourage the formalization of mortgages at a fixed rate?
Clearly. The new law lowers the conversion of the variable loan to the fixed rate loan with a 0.15% surcharge on the amount of the mortgage. Before it was 0.25%.

Will the new mortgages be more expensive?
They could be, because banks now run more expenses than before. Some entities, in fact, have recovered the opening commission. However, strong competition in this segment will limit an eventual rise in prices.

What role will notaries and registrars play?
Their role will be much more important. To start with it, it will be the client and not the bank who chooses it, as it used to be until now. Ten days before the signing of the loan, the client will be able to meet with the notary to solve all their doubts free of charge. Immediately afterwards, the notary will carry out a small subsequent test to make sure that he has everything clear and will draw up a record. The notary will deliver to the consumer a draft of the contract, a file that contains the most relevant data of the mortgage (European Standardized Information Sheet), a document that details all the clauses and the expenses of the loan, as well as a simulation of the periodic installments what the client would pay in different scenarios of interest rates. The bank will pay the notary's fee for raising the loan to public deed.