NEW MORTGAGE LAW

05-09-2019

The approval of the new mortgage law, which came into force on June 17, introduces important changes in the guarantees for customers of banks that need financing in their purchase and sale.

Here are the highlights:

1.- Prohibition of soil clauses.

2.-Banks have to pay the Tax of Documented Legal Acts (AJD), the first copies of the notary and the expenses of registry and agency. 

3.- Financial institutions will have to give all the necessary information to clients so that they can understand the credit conditions. The bank must provide this information at least ten calendar days before the signing of the mortgage. 

4.- With the new law it is the client who chooses the Notary, who has to certify that the banks comply with their obligations, and that the clients understand the conditions of the mortgage. In order to prove it, he has to explain to the users the conditions of the credits, make a test of understanding, and reflect this information in a notarial deed for free. 

5.- Early repayment fees are reduced by half for fixed-rate mortgages (2% for the first 10 years and 1.5% thereafter). 

6.- The conditions for evicting a customer for non-payment are tightened. In fact, the process can only begin if there are twelve unpaid instalments or 3% of the capital in the first half of the life of the loan, or 15 instalments or 7% in the second half.

7.-Previously, banks associated products with mortgages, such as a pension plan, an investment fund, direct deposit of payroll or insurance that the mortgage applicant had to take out. With the new law, these linked products cannot be demanded from the customer.  

These are the most relevant points to bear in mind when you begin the process of applying for a mortgage. As always, remember that good advice is essential to achieve the best conditions.

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