The electoral advance has not prevented the final approval of the Mortgage law, that arrives with three years of delay and under the threat of a millionaire fine of Brussels for the delay. The accepted amendments do not affect the spirit of a rule that reinforces transparency in the mortgage market and protects the consumer more. These are the keys to a text that finally clarifies the controversial distribution of expenses between the client and the entity.
When does the new Real Estate Credit Law come into force?
In 90 days from its publication in the Official State Gazette (BOE). Finally, the PP proposal to delay the adaptation period of the financial entities went ahead, so it will not be applied until the end of May.
How is the distribution of mortgage expenses?
The regulations clarify what expenses associated with the formalization of the mortgage correspond to each party. The client will only have to pay the appraisal, while the banks will assume the tax of Documented Legal Acts and the administrative, registration and notary costs. Additional copies of the contract will be paid by the person requesting them.
How does it affect the commissions?
Commissions for early amortization are reduced to 2% during the first decade and to 1.5% later in fixed mortgages. In the variables, the rate will be 0.25% in the first three years and 0.15% in the first five years. The opening commission is not limited, but it will be accrued only once and it will include all the costs that are to be passed on to the client.
Can banks impose linked products?
The bank is prohibited from forcing products such as insurance, pension plans or cards that condition the price or the granting of the loan, unless they adhere to the criteria of the Bank of Spain. They can only be sold separately from the mortgage and alternative insurance policies will be allowed.
How are default interests regulated?
The penalty for delaying payment of the mortgage may not exceed the loan interest by more than three points.
And the embargoes?
The requirements to initiate a foreclosure process harden. They rise from three to 12 months of non-payment to proceed to eviction. And the amount added by the unpaid installments must equal 3% of the capital lent by the bank (or 12 installments) if it has stopped paying in the first half of the life of the loan, or 7% (or 15 installments) if it is during the second half.
What about the floor clauses?
They are prohibited, so that a limit can not be set below which the customer can not benefit from interest rate reductions.
Can you change a fixed variable mortgage?
Yes, and the conversion process is facilitated with a lower cost of 0.15% for the first three years and then for free. This is in case it is a novation, that is, a contract change within the same entity.
What information should the client receive before signing the mortgage?
The client will have his contract at least ten days before the signing and, in addition, the notary must resolve all their doubts, check that there are no abusive clauses and ratify that the owner understands what he is hiring.
Do banks have new obligations?
In addition to informing the client more and better, the bank must evaluate in depth the solvency of the mortgaged future, consulting the credit history of the client at the Bank of Spain. And the incentives for workers to sell more credits are limited.
Will the new norm affect the mortgage offer?
Marcel Beyer, CEO of iAhorro, believes that with the law in hand, "entities will return to medium and long-term strategic planning in their mortgage offer as a stable legal framework is set," and adds that the offer is going to diversify.
Will the price of credits go up?
Some banks have already raised them in exchange for paying all the expenses, which will force the rest to be very competitive in price. But the key will continue to have the ECB, if you raise rates will increase the credit.