The last Council of Ministers has given its approval to the Law regulating real estate credit contracts, which will be born shortly after its publication in the BOE. In this article we will see a summary of the Law regulating real estate credit contracts , in the points that mainly affect the applicant for a mortgage to buy a home. If the reader is interested in having a mortgage broker analyze the viability of your mortgage application, you can fill out our contact form .
We will see as simply as possible the summary of the Law regulating real estate credit contracts; In future articles we will summarize more aspects of the standard:
Mortgaged individual, residential property mortgage
Its purpose is to protect natural persons (not only consumers) who ask for a mortgage (debtors), guarantors and, I understand, non-debtor mortgagees (the Law refers to guarantors or guarantors). The law affects both financial institutions, private lenders and real estate credit intermediaries (mortgage brokers as selected by our portal).
The real estate credit contract that regulates the norm refers to loans and mortgage loans on residential properties (not local or industrial buildings, for example).
Role of the General Conditions Registry
Lenders are obliged to register in the Register of General Contract Conditions the clauses that they incorporate in their real estate loan contracts. I recommend the blog In the field of the registrar Juan Belga, about it.
Obligation to inform and transparency
Different information obligations to be supplied to mortgage clients are introduced, which must be delivered at least 10 days before the date of signature before a notary:
- Information collected in the European Standardized Information Sheet ( FEIN ). The FEIN comes from the European regulations that transpose the Spanish Law. It will be considered a binding offer.
- The Standardized Warning Sheet ( FiAE ) with the information on relevant clauses or elements, such as the official reference index used (Euribor basically, since the IRPH has all the numbers to end lying down by the CJEU and the IRS is not used, between other forgotten references), minimum limits on the applicable interest rate, early maturity or distribution of mortgage expenses.
- In variable rate mortgages, amortization tables according to different interest rate scenarios, so that you can see how much monthly payments can go up. Our mortgage calculator can help you in this regard.
- Information of the required insurance.
- Warning to the client that he is obliged to receive personalized and free advice from the notary he chooses. You have read correctly, we will be obliged to receive training from the notary, who will not charge anything for it. Mortgages forced to be formed by notaries who do not charge for it, who also may not be experts in mortgage finance. Guess the reader the result in practice. This verification of the principle of material transparency must be made, at a minimum, the day before the mortgage is signed, the notary draws up a certificate. Both mortgage holders and guarantors must attend. If there is no “workshop”, the mortgage cannot be signed. I am very afraid that this procedure ends up being used by banks to protect themselves from the demands of the clients, although it is too early to assess the extent to which a judicial screen will involve them and how it will affect the role of notaries in the trials.
The obligation to assess the solvency of potential borrowers, guarantors or guarantors is included. This solvency assessment cannot be a cost, so clauses that charge commissions in this regard are illegal. The mortgage cannot be granted based on the mortgage guarantees, the lender must grant only mortgages that value may be returned. Unfortunately there is no irresponsible credit penalty that benefits the mortgaged; I recommend Matilda Lastida’s vision in this regard. If the mortgage is denied to us, the Law obliges the bank or private lender to inform us in writing and in a reasoned manner about the reasons for this refusal (another thing is that they comply with it in practice, which I doubt).
With this article of the summary of the Law regulating real estate credit contracts, we finish the analysis of articles 1 to 15 . We will continue to summarize the Mortgage Law in future articles.