After two years and nine months, after two changes of Government and the shadow of a European fine, Congress has finally given its approval to the mortgage law, which will now have to be ratified by the Senate, to be published in the Official Gazette of the State (BOE) and one month later will come into force, approximately in March 2019. In this post we tell you in detail the fundamental aspects and what you should do if you are going to sign a mortgage based on the new law.
The measures contained in the new law will affect all those mortgaged who sign a loan after its publication in the
Broadly speaking, these are the nine fundamental aspects that stand out.
Greater user protection
The client will have his contract at least ten days before signing. The goal is to have enough time to read the contract with peace of mind, resolve any doubts that may arise and dialogue with the entity if there is any discrepancy. Related to this and in order to avoid mortgages being granted to people without payment capacity, the bank must evaluate in depth the solvency of the mortgaged future. The regulation obliges the bank to consult the client's credit history at the Bank of Spain, and if the loan is granted, it allows the user to transfer the information to private credit information platforms. The cost of this 'investigation' should be assumed by the bank, as this expert clarifies.
The role of the notary
The role of the notary becomes relevant when ratifying that the owner knows the product he is hiring. Before the law, the mortgaged only had to go to the notary to sign his mortgage. However, with the new law, the owner will have to go to the notary a minimum of two times. The first will be without the entity to be able to ask any questions that arise about the intricacies of your contract. The second will be with the entity for the signing of the mortgage contract. In addition, the contractor will have to answer a questionnaire to show that he knows the ins and outs of his contract. In this way, the law says 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.
Distribution of expenses
Another point that most affects customers
Goodbye to the suelo clauses
The approved law prohibits the suelo clauses, so in the operations with variable interest rate cannot be set a limit on the low interest rate. The purpose of this rule is that the client can benefit from the falls of the Euribor, although the minimum interest will be set at 0%, it can never be negative.
News in the links
Home insurance, life insurance, cards ... These are some of the links that entities propose to customers to access the mortgage loan. The new law establishes that the entities will not be able to impose their linked products, although they will be able 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 linked products. Banks may continue to market their linked products, but now the customer may submit alternative policies to their entity and in no case may the bank accept an alternative policy other than the one proposed by them, which may lead to a worsening of the loan conditions.
At the time of formalizing the loan many entities charged their clients a commission to open the loan. At this point you can find large differences in entities, from those who do not charge anything to those who 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, keys after signing
The client can also change banks or improve their mortgage whenever they want. With the new regulation, the client with previous loans to the law will be able to subrogate without cost and freely his mortgage. From this financial comparator they explain that 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 cost of formalizing the mortgage. In the case of the 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 for the novation.
Greater protection in case of foreclosure
The law will also protect mortgages more in case of foreclosure. Before, if the mortgaged stopped paying in the first half, 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 mortgage (foreclosure) to 12 months or 3%. 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.
Less fees to be amortized
Finally, they cut interest prepayment fees for fixed-rate mortgages by half (2% during the first 10 years and 1.5% after), while the client must choose the type of Fewer at three or five years when its mortgage is a variable rate (commissions of 0.25% or 0.15% respectively).