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New Mortgage Law: All You Need to Know

Nueva ley hipotecaria

The new Mortgage Law entered into force in Spain in June. As you know, in CHG we always want to give you useful information in order to facilitate the purchase procedures when you decide to buy a house. We have already talked about taxes when buying a property in Spain and even how to get a mortgage. That is why we don’t want to stop informing you about this new law that you should know.

What is Mortgage Law?

It is the rule that regulates the mortgage market in Spain. Since the Decree of February 8, 1946 to this day there have been different laws on mortgage. Now the mortgage market is regulated by the new law of June 16, 2019.

Así es la nueva ley hipotecaria

What are the Novelties and Advantages of this Mortgage Law?

We’ll tell you about the main keys, point by point, of this new law that favors the purchasers:

      • New distribution of expenses: The bank is responsible for paying for the management, registration, notary, the stamp duty (Impuesto de Actos Jurídicos Documentados) and its copy of the public document. And the client is only responsible for the property valuation and its copy of the public document (very different from the previous mortgage law according to which the borrower paid almost everything).
      • More protection for the mortgagor: This new mortgage law has been made primarily to protect the borrower. In what way?
        –  More information: The bank has to deliver to the mortgagor all the conditions contained in the European Standardised Information Sheet (ESIS or FEIN by its Spanish abbreviation), as well as provide the Standardised Warning Sheet (FiAE by its Spanish abbreviation), with all the clauses and a copy of the contract.
        Visit to the notary: Both the mortgagor and the guarantors have to go through the notary at least one day before signing the public document to receive free advice on everything regarding the mortgage.
        Clauses that fail to comply with the regulations will be declared null and void by right.
        Complaints and claims will be processed through a new dispute resolution entity.

Nueva ley hipotecaria

      • The early repayment fee is reduced: Depending on the type of mortgage, one or the other will be charged.
        – If it is fixed, it will be 2% for the first 10 years and 1.5% for the rest of the term.
        – If it is variable, there are two options: 0.25% during the first three years of the contract term or 0.15% during the first five years of the loan term. After this, the rest of the term will be 0%.
      • The minimum payments for the property embargo are extended: 12 for the first half of the term and 15 for the second half.
      • Fee decreases when changing from variable to fixed mortgage.
      • The customer has more freedom to change banks.
      • Prohibition of related sales: that is to say, the new law prohibits banks from obliging the client to contract other products so that he can get the mortgage, such as pension plans or credit cards.
      • Banks may lend in currencies other than their own (multi-currency mortgages).
      • The application of a minimum interest in variable mortgages is prohibited.

Have you seen how many benefits of the new mortgage law for the purchaser? It’s certainly good news if you are thinking about buying a new property. What can our company CHG offer you? Visit our new construction projects, we are sure that among them you will find the apartment or house you have always dreamed of.

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