Law 5/19 of 15 March, regulating real estate credit agreements, better known as the new Mortgage Law.
This new law, which came into force on June 17, 2019, seeks greater transparency and clarity for consumers, emphasizing the fact that customers must know in detail the loan they are signing and that they are able to resolve any doubts they may have but … what are the basic points of this new law?
Here we summarize the 7 main points to keep in mind if you are thinking about signing a new mortgage.
1.- Amortization and interest on late payments. Broadly speaking, we can say that the commissions that have been applied until now are reduced by almost half.
The opening commission will have to be paid by the customer. This amount will depend on each bank and must be taken into account in the total costs involved in signing a mortgage.
2.- Subrogation and novation: There are no commissions, either to novate the mortgage, that is, to change some of the conditions of the agreement between the parties (e.g., modification of the term, amount, new guarantees, etc.) or to be subrogated to an existing one (e.g., a way of trying to improve conditions, either by changing the bank, the creditor, or the holder for another person, that is, the debtor).
3.- Foreclosure. The terms are extended to, at least, 12 months.
4.- Elimination of ground clauses
5.- Links or products offered by the bank. From now on the bank will not be able to impose the contracting of one or several of its products, such as a home or life insurance, as a condition for the concession of a mortgage, although these may continue to be a bonus in the mortgage price.
6.- Mortgage expenses. This will undoubtedly be one of the points of greatest interest to the consumer, and is that with the new entry into force of the Mortgage Law, the bank will assume all the costs of the mortgage, except the appraisal, although there are some banks that may offer also to assume this cost. It should also be noted here that it will be the consumer who can freely choose the appraiser for his future home.
7.- The role of notaries. To ensure that the client understands what he is signing, notaries have to ensure that the client has received information about the characteristics (FEIN) and all the clauses of his mortgage (FIAE clauses) and, above all, that he understands them thoroughly.
To do this, in addition to the free advice of the notary, the client must perform a test that will be incorporated into the records that are drawn up in the notary’s office.
The same procedure shall be followed with the guarantors and endorser of the mortgage, if any.
It should therefore be noted here that there will be two visits to the notary’s office: one to sign the records and the test and another, with a margin of ten days established by law, for the signing of the mortgage loan deed.
A further fact to bear in mind is that the client will be able to choose, at his free disposal, the notary’s office where he wishes to sign his loan, by accessing the official website of the General Council of Notaries.
For any clarification or doubt you may have, do not hesitate to contact Imont Legal Services, as we will be delighted to advise you.