June 23, 2021

The BOE publishes the mortgage law, which will take effect in three months

The BOE publishes the mortgage law, which will take effect in three months

The Official State Gazette (BOE) publishes this Saturday the law regulating the contracts of the real estate credit that adds elements of protection to the consumer and balances the distribution of the expenses that entails the constitution of a mortgage, and that will come into force within three months

The publication in the BOE takes place almost a month after the norm was finally approved in the Congress of Deputies.

Specifically, it was last February 21, when Parliament completely gave its approval to the law, which is the result of the transposition of a European directive that is almost three years behind schedule, for which the European Commission threatened Spain with a fine of more than 100,000 euros a day.

The law establishes, among other issues, that the mortgage for the first home will be recorded with the tax of documented legal acts (AJD), which will be paid by financial institutions.

In addition, the banks must pay the first copies of the notary, the expenses of the registry and those of the agency, while the client will pay the second copies of the notary and the expenses of appraisal.

The law also eliminates the ground clauses and is more demanding with the start of the eviction procedure, which can only begin if there are twelve unpaid installments or 3% of the capital loaned in the first half of the life of the loan, or 15 installments or the 7% in the second half of the credit.

Early amortization fees are halved for fixed-rate mortgages (2% during the first 10 years and 1.5% as of this period) while the customer must choose the three or five year amortization rate when its mortgage is a variable rate, whose commissions will be 0.25% or 0.15%, respectively.

Banks must give clients ten days to analyze the pre-contractual information of the real estate loans before signing them, and they will have to offer a standardized form so that the client can compare the mortgage conditions offered by each entity.

The commission for interest on arrears has remained in the remunerative interest plus 2%.

The norm also establishes that the bank will be able to sell insurance linked to the mortgage, although it will have to accept alternative policies without worsening the conditions of the loan and the client will be able to renew them every year.

The client can subrogate without cost and freely his mortgage and between the entities a mechanism of compensation based on the collected interests and those pending of collection linked to the cost for the expenses of constitution of the mortgage will be established.


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