In the middle of the last quarter of 2018, anew Spanish mortgage law was approved, whose purpose is to provide more transparency and security regarding mortgages, affecting both bank organizations and its clients. This regulation, which had been delayed more than two years, finally received the approval of the Congress of Deputies, and will come into force on March 2019.

Which are the news of this mortgage law?

If you are about to agree a mortgage, it is essential that you familiarized with the most important aspects of this new legislation. Here we tell you the most significant changes.

Coverage of the law

The statutes provided on the mortgage tax will affect those who sign the contract after the mortgage law is published in the Official State Gazette (BOE). In addition, it also affects those loans previously signed, but which will be subject to subrogation once the regulations have entered into force.

New allocation of mortgage expenses

One of the most significant changes that will be executed at the time of formalizing the mortgage is the new distribution of expenses. In this case, the bank must cover the costs derived from the notary, the agency, the registry, the IAJD and its copy of the deed. On the other hand, the client must only assume the appraisal, which may be around € 300 and € 600.

Higher customer protection

In this new mortgage law, the user has a much more relevant role. Precisely for that reason, the contract will be delivered with a minimum of 10 days before signing. The purpose is to have enough time to review each clause, resolve doubts and discrepancies.

Decrease in early repayment

Once this regulation comes into force, the user will pay less commissions if he chooses to cancel the mortgage loan in advance. In this case, the penalty will depend on the moment in which the amortization is generated and the type of mortgage you have.

For example, in variable-rate mortgages, the maximum commission moves between 0.25% (from 3 years) and 0.15% (from the fifth year). On the other hand, in fixed mortgages, the maximum commission will be between 2% (in the first 10 years) and 1.5% (from that moment)

Subrogation and novation without costs

The user can move a credit, from one financial institution to another, whenever he wants. With this new mortgage law, it is established that the mortgage expenses generated during the transfer must be assumed by both banks. The tax will be calculated based on the outstanding debt and the respective interest.

In this way, the client who owns a mortgage prior to the law can subrogate it freely, without costs. And when it comes to novation, if the mortgagee does not agree with the agreed conditions, he can modify them without the bank charging him additional commissions.

The notary gains more importance

With the new law it is established that the mortgaged not only have to go as previously to the notary for the signing of the mortgage contract, but also must go at least once more, before signing, to make any query regarding to the terms of the contract. In this way, the notary becomes a fundamental figure to ensure that the user knows what he will sign.

Undoubtedly, the new mortgage law poses a safer and more transparent scenario for customers who want to access a mortgage loan. However, if you are going to buy a property and you still have doubts, do not forget that in Proyectos Insulares we have a comprehensive advice service for buying and selling with which will also help you in everything related to banking aspects. Contact us!