Written by Canarian Weekly Business
[caption id="attachment_44892" align="alignleft" width="150"] Estate agent shaking hands with customer after contract signature[/caption]
By Mariano Zunino
A NEW mortgage law was approved on Tuesday by the Congress of Deputies, to help customers avoid evictions.
It also forces banks to pay mortgage expenses, as well as lowering mortgage amortisation (reducing the cost of each repayment).
In addition, it points out that it is not obligatory, but an option, to contract products linked to the mortgage.
Changes introduced to the Mortgage Law
The new law has to match the European Regulation 2014/17/EU, and these are the most important modifications:
The bank will pay all mortgage expenses, such as notary fees, registry fees, agent fees, Stamp Duty (AJD). However, it is expected that the bank will transfer these costs to the customer by means of raising interest rates. The valuation fees will be paid by the customer.
There will be more protection for customers to avoid eviction. During the first half of the contract, there must be a non-payment of fees that reach 3% of the principal of the loan, or 12 monthly payments. Thereafter, the mortgage can be enforced.
From the second half of the contract, there must be a non-payment of fees that reach 7% of the principal of the loan, or 15 monthly payments.
Repayment of mortgage advantages
The new law wants to lower the costs of early repayment of the mortgage, to equate Spanish legislation with the European directive.
This measure has been approved, retroactively, for new mortgage repayments. It means that those who make an early repayment on their mortgage, from the entry into force of the law, may avail themselves of these new conditions.
But those who made an amortisation in the past (with the previous law in force), will NOT be able to claim or recover the money.
Change to fix interest rate
It will be easier and cheaper to change a mortgage with variable interest to fixed interest. The maximum bank commission for changing the rate will be 0,25% during the first three years. After that, it be free. The bank will retain the right to accept or refuse, the change of interest rate from variable to fix.
No surrogate commission
It will be possible to surrogate and renovate a mortgage without bank commission. The bank will not charge a fee in these cases.
Maximum delay interest
The maximum delay interest, fixed in the contract, will be three times the official rate.
It is anticipated that the new law will be introduced in March 2019.
*Mariano E. Zunino Siri is a lawyer, registered at the Tenerife Bar Association since 1991. Email: firstname.lastname@example.org ; email@example.com