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New mortgage law in Spain: changes and novelties

New mortgage law

On Sunday, June 16, the new mortgage law in Spain entered into force, obliging the entities to assume the expenses of notary, agency and registry, among others. This will save the client an average of between € 500 and € 1000. In this post, we detail everything you need to know about the new mortgage law.

Last February, the Law Regulating the Real Estate Credit Contracts, better known as the mortgage law, was approved at the Congress of Deputies. It will, which came into effect this Sunday. That after three years of negotiations and procedures, it introduces a series of changes in the process of hiring housing loans. Consumers, banks and notaries are the main affected by the modifications.

What are your objectives?

The main one is to guarantee the protection of consumers when initiating a loan of these characteristics with their bank. After the previous experiences that led to the bursting of the real estate bubble in 2008. The national and community authorities intend to ensure that customers understand the contracts signed and are not exposed to abusive clauses. Such as those that had to assume for formalization costs, interest for late payment or the well-known floor clauses.

Among the most outstanding news. The text establishes that from now on it will be the banks and not the clients that will have to take charge of the payment of the first copies of the notary, the expenses of the registry and those of the agency. The client will pay the second copies of the notary and the appraisal expenses.

The norm - which also establishes that the mortgage for the first home will be taxed with the tax of documented legal acts (AJD) that the financial entities will pay - eliminates the ground clauses.

Another novelty is that the bank can only begin the eviction procedure if there are twelve unpaid instalments or 3% of the capital of the mortgage in the first half of the life of the loan, or 15 instalments or 7% in the second half of the life of the loan. same.

The entities must transfer the conditions that they offer to the interested parties in the technological platform of the notaries so that the public notaries can then inform their clients in a personalized and detailed manner and without the presence of bank representatives.

Notaries must inform clients free of charge about the conditions and precise clauses of the mortgage loan offered by the bank within 10 days. Carry out a citizen comprehension test and reflect that information in a notarial deed, also at no cost.

What contracts does it apply?

The new law will be applicable to mortgage loan contracts whose borrower, guarantor or guarantor is an individual and the mortgage falls on real estate for residential use. Also when the purpose of the loan is to acquire or retain property rights over land or buildings built or to be built as long as the borrower, guarantor or guarantor is a consumer.

Stricter regulation

Precisely to raise the guarantees of the client. The new regulation establishes more stringent examinations and requirements of its solvency conditions to reduce the chances of default. It will be obligatory for the lender to consult the credit history of the client in the Risk Information Center of the Bank of Spain. The bank must send the client its contract 10 days before the signature to perform a thorough analysis.

New mortgage law in Spain: changes and novelties
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