After two years and nine months, after two changes of Government and the shadow of a European fine,The Congress of Deputies gave the approval last week to the Mortgage Law. Now, the new Law will have to be ratified by the Senate, published in the BOE and one month later it will come into force. The approximate date of its entry into operation could be March 2019, as calculated from the iAhorro platform.
The three points in which the new client will win as soon as the law comes into force will be information, time and money. Finally, the new norm will not have retroactive character of general form and those already mortgaged will not be able to enjoy these advantages. However, it will affect those contracts that were entered into previously.i are subject to novation or subsequent subrogation upon its entry into force.
1. Greater protection to the user
The client will have his contract at least ten days before signing. The objective is that you have enough time to read it calmly, resolve doubts and dialogue with the entity if there is any discrepancy.
Related to this and in order to prevent mortgages from being granted to people without the ability to pay, the bank must evaluate in depth the solvency of the mortgaged future. The regulation obliges the bank to check the client's credit history at the Bank of Spain, and if the loan is granted, it will allow the user's data to be transferred to private credit information platforms. The cost of this "investigation" must be assumed by the entity.
2. The role of the notary
The role of the notary becomes relevant when ratifying that the owner knows the product he is hiring. Before this law, the mortgaged only had to go to the notary to sign your mortgage. Now, the owner will have to go to the notary a minimum of two times. The first time will go without the representative of the entity to be able to ask any question that arises about the intricacies of your contract. The second time you will go with the bank to sign the mortgage contract.
In addition, the contractor will have to answer a questionnaire to show that he knows the fine print of what he is going to sign. In this way, the law establishes that a "manifestation signed by the borrower will be delivered, in which he declares that he has received the documentation and that its content has been explained to him".
3. Distribution of expenses
Another point that most affect customers is the new distribution of expenses at the time of formalizing the mortgage. With the new law, the client will only pay the appraisal. The rest of the expenses will be paid by the bank as the agency, the Tax on Documented Legal Acts (IAJD), the notary and the expenses of the register).
This part represents a very important saving when it comes to formalizing your contract. In this way, will only have to face the cost of the appraisal that can be between 300 and 600 euros. In addition, the client may freely choose appraisers who may be natural persons.
Now the bank will pay the agency, notary, IAJD and the registry. Of them, the departure of the tax of Legal Acts is the highest and depends on each autonomous community. This quantity can vary between 1,500 euros to 6,000 euros depending on the loan and the community in which the house is. The rest of the expenses could suppose to the entity a cost of 1,000 to 3,000 euros.
4. Goodbye to the floor clauses
The law prohibits land clauses and therefore, in operations with a variable interest rate, no limit can be set on the lowering of the interest rate. The purpose of this rule is that the client can benefit from the fall of the Euribor, although the minimum interest will be set at 0% and can never be negative.
5. News in the linkages
Home insurance, life insurance, cards … These are some of the links that entities propose to customers to access the mortgage loan. The new norm establishes that the entities will not be able to impose their linked products, although it will be allowed to make bonuses for the products that are contracted, as it is done at present.
Many banks discount with discounts on their interest rates if the client hires any of their products links. Banks may continue to market their linked products, but now the customer may present alternative policies to their entity and "in no case" the acceptance by the entity of an alternative policy other than the one proposed by them may lead to worsening of the loan conditions .
6. Opening commission
At the time of formalizing the loan, many entities charged their clients an opening commission. At this point large differences can be found in the entities, from which they charge nothing until they charge 2%.
The new norm does not prohibit the collection of this commission although it does establish that this fee will be accrued only once and will include all the expenses of study, processing and granting of the loan or similar.
Subrogation and novation
The client can also change banks or improve their mortgage whenever they want. With the new regulation, the client, with loans prior to the Law, can subrogate without cost and freely his mortgage. Between the two entities in which the change is made, a compensation mechanism will be established based on the interest collected and the pending collection linked to the formalization cost.
In the case of novation, if the mortgagee is not satisfied with the conditions you signed on your mortgage, you can change them without the entity charging you any commission.
The law will also protect mortgages more in case of embargo. Before, if the mortgaged stopped paying in the first half (imagine a mortgage of 20 years, in the first 10 years), to execute the mortgage was enough that the client had stopped paying three months. The new agreement raises the months of non-payment to execute the 12-month or 3% mortgage. If this situation occurred in the second half of the loan period, the amounts due and not paid should equal 12 months. The new law will establish that the non-payment will have to assume 7% or 15 months.
On the other hand, they reduce by half the commissions of early amortization for fixed rate mortgages (2% during the first 10 years and 1.5% after), while the client must choose the type of amortization to three or five years when your mortgage is variable rate (commissions of 0.25% or 0.15% respectively).