how to apply for a mortgage

7 questions about the new mortgage law

Lawyou — jueves, 25 de febrero de 2021

Questions and consequences of the new mortgage law

There is a lot of confusion with the new Law regulating Real Estate Credit Contracts known as the «mortgage law». For this reason, we offer you 7 basic questions to keep in mind before this new change that affects banks and customers.

Does the new mortgage law affect what I’m already paying for?
This new law already in effect will apply for all contracts signed as of June 16, 2019. For customers who signed at an earlier date, they will not be able to benefit from many of the aspects to take into account. Although some, if they do have a retroactive nature.

  1. Lengthening of the foreclosure period in the event of non-payment.
  2. Opportunity to change bank without the current entity being able to prevent it.
  3. Change from a variable loan to a fixed rate with a discount in the commission.

How many months of non-payment do I have to have for the repossession process to begin?


Perhaps this is the most satisfactory measure of the new Law regulating Real Estate Credit Contracts. The activation of the seizure by the bank is much more demanding after the activation of a new Law.

In order for the bank to act with the foreclosure process the following requisitor have to be fulfilled:

  • In the first half of the term, the delay may not exceed 3% of the capital granted or that 12 unpaid installments are accumulated for the process to be executed.
  • In the second half of the term, the aforementioned percentage rises to 7% and the unpaid monthly installments are 15.

When should I receive my mortgage contract?

The bank will be obliged to make the contract available to the client a minimum of ten days before signing. This is because the client must have enough time to review the work calmly and resolve any doubts that may arise with the bank.

The bank must consult the client’s credit history with the Bank of Spain before granting the mortgage. This is done in order to prevent mortgages from being granted to people with no capacity to pay. The cost of this investigation must be borne by the bank.

What is the role of the notary from now on?

From June 16 the work of the notary becomes relevant to inform the holder or check that he knows the product he is contracting. You no longer only have to go to the notary to sign, but you will have to go at least twice. The first meeting at the notary’s office will be without the entity being present. This is so that you can ask any questions that may arise without the presence of the bank. The second visit will be for the signing of the mortgage contract.

In the first visit the client will have to fill in a questionnaire so that the notary can make sure that he/she knows in detail the contract that he/she will sign later.

What expenses should I assume when taking out a mortgage contract?
From now on the client must only assume the appraisal and from the first deed onwards (second and subsequent). The rest of the expenses will be assumed by the bank.

  • Assessment
  • .

  • IAJD
  • .

  • Notary fees.
  • Registration fees.
  • Registration fees.
  • Registration fees.

This means that the client will only pay between 300 and 600 euros representing the above-mentioned appraisal fees.

What happens with the floor clauses?

With the new law, the floor clauses are prohibited, so the operations of variable interest rate will not be able to set a limit to the decrease of the interest rate. Ending with this rule, the client will be able to benefit from the falls of the Euribor, although the interest rate will never be negative, it will be set at 0%.

What are the consequences of these changes?

All these savings for the customer, which will be an average of between 500 and 1,000 euros at the signing of the mortgage, does not mean that the cost will be assumed by the financial institution. These cost reductions in commissions and the increase in expenses will lead in one way or another to an increase in interest rates.

In addition, all the investigations to be carried out by the bank will raise the solvency requirements and together with the increase in unpaid monthly payments, will make the granting of mortgages to young people and lower incomes more difficult.

Lawyers at LAWYOU will help you.

At LAWYOU we have lawyers with many years of experience in different branches of law. If you have any doubt or legal problem, do not hesitate to contact usto tell us about your case through our email or, if you prefer, you can also call us on 602 226 895.

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