The Law regulates the entire process of contracting a mortgage, from advertising to its signature, establishing new procedures that will affect both bank employees and their remuneration policies, as well as the client, who will have to make an extra effort to demonstrate that ‘Know what is done’ when signing a loan. For this reason, you should know the rule well. These are the 15 questions, with their answers, that will facilitate the task.
1. WHAT REQUIREMENTS SHOULD I MEET TO ACCESS A MORTGAGE?
Before beginning any type of negotiation, the bank is obliged to carry out a solvency test, at no cost to the client, which will be much more demanding than until now. For example, in the case of couples, if one of the two does not meet the established requirements they will not be able to access the mortgage.
According to experts, the entities may not exceed the minimum established by each bank to grant a loan. These minimums will now be calculated with a greater weight of equations such as the ‘loan-value of the property’ or the ‘debt-income’ of the client, with a lower weight of other factors such as guarantees. The financial institution is required to review these data periodically, keeping a record that will be supervised by the Bank of Spain.
2. WHAT DOCUMENTATION DO I FACE BEFORE SIGNING THE MORTGAGE?
Banks can no longer limit themselves to the advertising leaflet to report the conditions of their mortgages. In the pre-contractual phase, entities have to deliver two new documents, the European Standardized Information Sheet (FEIN) and the Standardized Warning Sheet (FiAE). The regulator thus replaces the old FIPER, in which only the mortgage information adapted to the applicant’s economic conditions was included.
3. HOW ARE FEIN AND FIAE DIFFERENTIATED?
In general terms, the FEIN includes personalized mortgage information, while the FiAE will contain data on clauses (early maturity, for example) or relevant elements such as the distribution of loan expenses.
The FEIN includes data such as the commission the lender receives, the amount, duration and currency of the mortgage, with a simulation of the fluctuations that may arise if signed in a currency other than the euro (and that the bank must update from periodically).
The bank must also provide the customer with the repayment schedule of the loan interest rate, in addition to the amount of each installment and its periodicity. These documents also include a simulation of how the interest of the mortgage will vary before different scenarios of evolution in interest rates.
4. HOW LONG DO I HAVE TO ‘STUDY’ ALL THE INFORMATION?
The client must receive all this documentation at least 10 days before writing. The term has been such an important aspect for regulators that, if it is proven that the mortgage has been signed before those 10 days, it will be declared void. The idea is for the client to use that time to consult, ask and ask any questions about the loan he is about to sign.
5. WHEN DO I HAVE TO VISIT THE NOTARY?
With the new norm, the client will visit the notary he chooses twice. The first meeting will be in the ten days prior to the signing of the deed. On this first visit, the notary will perform a ‘test’ to the client to make sure he knows all the points of the contract. Without the “ok” of that document, the applicant will not be able to receive the deed of the dwelling. In the same way, if it is detected that the notary has not done his informative work, he will be sanctioned.
6. DOES THIS SERVICE COST?
No. The notary will write his notarial certificate for free, recording the questions and answers he has made to the client, as well as the explanations added.
7. WHAT DOCUMENTATION DO I HAVE TO SUBMIT?
The client must present to the notary the draft contract of the loan, the FEIN, the FiAE, the simulation of the periodic installments (and the different scenarios of interest rate evolution), in addition to the document in which the expenses are reflected associated with the public deed of credit. All this documentation must be sent from the bank to the notary electronically. The Government has given a period of one month and a half more to the bank to use the digital platform of the notaries to send all this information. As explained by the Ministry of Justice last Friday, the modification does not paralyze the Mortgage Law or the formalization of new loans, as a transitional regime is created for clients and banks to communicate with notaries through other channels.
8. WHEN IS THE SECOND VISIT TO THE NOTARY?
Once the notarial act has been drafted and signed, the so-called contractual phase begins, with the authorization of the deeds of the sale and the loan, which are usually signed simultaneously. This is the last moment to clarify any doubt that the client has, because once the deeds are authorized by the notary, it will not be possible to go back.
9. HOW DO I DETECT A POSSIBLE ABUSE CLAUSE?
In addition to reading all the documentation from top to bottom, the notary is the figure that must detect if the entity has included an abusive clause in its conditions, checking it in the General Register of Contract Conditions.
With the real estate credit law, the land clauses disappear and the text specifically prohibits the application of a minimum interest in variable rate mortgages. In the case of non-payments, the rule allows ordering an eviction when the customer owes 12 monthly payments or 3% of the capital granted, during the first half of the duration of the loan. During the second half of the life of the loan, the execution will be carried out if the client stops paying 15 months or 7% of the loan.
10. WHAT EXPENSES WILL I HAVE TO ASSUME FROM THE MORTGAGE?
Until now, the client paid the costs of agency, notary, housing registration and appraisal. As of Monday, the first three will be paid by the bank. According to the calculations of iAhorro.com, this can mean savings to the citizen of between 500 and 1,000 euros on average, depending on the amount of the loan. Anticipating the norm, banks have for months assumed the tax of documented legal acts (AJD), which until recently the client paid.
The appraisal of the home is the only expense that will be borne by the client, which may be chosen by the company you want without the need to be that of the same bank in which you sign the mortgage. However, there are eight entities that already assume that cost (some even if it is done with another bank): Santander, CaixaBank, Ibercaja, BBVA, ING, Banco Pichincha, MyInvestor and Openban.
Copies of the mortgage loan deeds will be paid by the person requesting them, except for the simple copy that the notary will send to the client’s email (free of charge).
11. CAN THE BANK REQUIRE ME TO CONTRACT INSURANCE TO GRANT THE MORTGAGE?
In principle, the rule prohibits the linking of products to the contracting of a mortgage loan. However, made the law, cheated. The text does allow to apply bonuses on the loan differential for each product that is contracted with the bank.
In the case of home insurance, the client may present a policy from another entity with the same or better conditions and his bank will have to accept it without making the proposed offer worse.
12. WILL I BE CHARGED FOR OPENING COMMISSION?
Yes. The law does not prohibit the collection of this commission, but it does establish that it will be the only one, so the study commission is out of the equation.
13. WHAT IF I WANT TO CHANGE THE CONDITIONS OF MY MORTGAGE?
The rule has introduced changes to facilitate the change from one mortgage to another, or the negotiation of new conditions. Although it does not say it specifically, the rule reflects an obvious commitment of regulators for the passage of variable mortgages to fixed-rate mortgages. Specifically, whether the change is made by subrogation to another entity or by novation, the commission may not exceed 0.15% of the capital repaid in advance during the first 3 years of the term of the loan contract. Afterwards, the bank cannot demand any commission.
14. WHAT IF I WANT TO CANCEL IT?
If the client wants to return all or part of his loan before the established time, the norm establishes that, in the case of fixed-rate mortgages, the commission may not exceed 2% of the anticipated capital (not on which it is still pending ) during the first 10 years and 1.5% from the eleventh year. For variable rate mortgages, the cost may not exceed 0.25% of the anticipated capital during the first three years, or 0.15% of the first five.
15. DOES THE NEW LAW AFFECT ME IF I ALREADY HAVE A MORTGAGE?
No. All deeds prior to June 16 are governed by the old regulations. Therefore, they will not be able to claim the expenses they paid when they formalized their mortgage or request the refund of the tax of documented legal acts (AJD).
Of course, who has a mortgage already signed yes can benefit from the limits of commissions in cases of subrogation or novation of the loan.
Similarly, the Ministry of Justice announced on Friday that mortgages whose binding offer has been delivered with the requirements of the old law, but which will be raised by public deed after the new one comes into force, can only be formalized with effects of the previous regulations the mortgages in which it is credited that the borrower has accepted before Sunday. If it is not accredited, the new regulations will apply.
source : invertia.com