At Montesinos Falcón Real Estate we like to keep you informed about the latest news in the real estate sector.
That is why we want to summarize the new mortgage law 2019, which after the crisis derived from the real estate boom, is one of the main national news, even months before being approved.
The first version of this initiative was presented by Mariano Rajoy in 2017, it has returned to the parliament after the summer of 2018. Finally, this law will come into effect 3 months after its publication in the BOE – Official National Newsletter, not before May 2019.
Contents
With some issues to be completed, the new law will introduce the following changes with benefits for the mortgaged person.
Of economic nature:
Expenses
- The bank may charge only those services that it can prove that it has actually provided, which will be explained and summarized in a transparent manner for the mortgaged person.
- Documented legal acts should be paid by the banks instead of the client. This figure may range from 0.5% to 1.5% depending on the Autonomous Community of the property.
- About notary expenses:
- The client will only pay the valuation and the copies of deeds requested for his/her self.
- The administrative expenses, such as notarial deeds and registration will be borne by the bank or lender.
Commissions
- Floor clauses. Prohibited all clauses related to variable mortgages where it is stipulated that, by lowering the Euribor, the bank would charge a minimum interest (floor) that could never be reduced.
- Lower commissions for early repayment:
- Fixed mortgages at 2% for the first 10 years and 1.5% for the year 11
- Variable mortgages 0.25% for the first 3 years and 0.15% between 3 and 5 years
- The bank must unify in a single charge the costs of opening, study, processing and agreement, and must be completely clear and transparent to the mortgaged.
- Regarding the foreclosures, the new law prevents a bank from starting a foreclosure process, prior to eviction, until a client fails to comply with the following defaults:
- During the 1st half of the mortgage, for debts> 12 monthly payments or 3% of the mortgage loan.
- During the 2nd half of the mortgage, for debts> 15 monthly payments or 7% of the loan exceeded.
- A period of 1 month will be granted for compliance.
- It will also limit the default interest for non-payment only to the principal due and pending payment, with a maximum remunerative interest of 3 points for new mortgages and 2 points for old mortgages.
Terms
- The debtor can change banks or mortgage terms at any time, without incurring additional costs.
- In the case of variable mortgages, they may become fixed with a maximum penalty of 0.15% of the capital reimbursed during the first 3 years. The penalty will disappear by the 4th year.
- With respect to insurances, still being the obligation to take insurance to cover the requirements of the mortgage (life insurance), but on an annual basis, and with a renewable nature. However, the obligation to grant the mortgage to purchase products linked to the mortgage (such as home insurance, pension plans, etc.) is forbidden, unless this means a benefit in the mortgage contract.
Regarding procedures:
- Valuations. The bank or the lender will use only professionals approved and recognized by the bank of Spain.
- Credit history. Banks are required to analyze the creditworthiness of the client by consulting their credit history at the risk center of the Bank of Spain and private risk entities. They will also have the obligation to share credit data with these institutions.
- Knowledge of what is signed. The Notary will have to attest that the debtor knows what he / she is signing, so the client will have the right to have a free interview with the notary prior to the deed, to clarify any doubt they could have.
- By now, there are no funding priorities for mortgages that promote energy efficiency or renewable, however, it is contemplated that this type of mortgages could be exempt from paying taxes.
All these changes will apply in 2019 for mortgages contracted 3 months after the publication of this law in the BOE, however, some of the clauses can be applied to old mortgages, such as the early payment clauses. Will also affect the foreclosures procedures currently suspended and pending resolution in the Court of Justice of the European Union.
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