Cornerstones of the mortgage reform

The new “Mortgage Law” is an implementation of Directive 2014/17/EU of the European Parliament and of the Council of February 14, 2014, which came into force on June 16, 2019, and includes a fundamental reform of the current regulation of real estate loans or – credit (especially mortgages).

The new law will not apply retrospectively, meaning it will not affect contracts entered into before it came into force. However, if a contract is subject to novation or regression prior to the new law, it will affect you.

Who is it for?

The law only applies to loan agreements (those in which the lender grants or undertakes to grant a loan in the form of a deferred payment, credit or other similar payment facility) that have certain characteristics, e.g. B. that the loan will be granted by individuals or legal entities engaged in business or professional activities in the financial services market (including occasional interventions provided it is for an investment purpose only), or that the borrower, guarantor or guarantor is a natural person (not necessarily consumer) is.

Innovations in the Mortgage Reform Act

Among other things we can highlight:

  • Pre-contractual information and advertising for real estate loanss: The law provides detailed regulation of the pre-contractual phase (including advertising) so that the consumer can make an informed decision on whether or not to enter into the credit agreement.
  • credit costs: The costs corresponding to the lender and the borrower are established, which are verified by the notary who certifies the deed: lender (administrative, notary and registry fees, AJD tax) and buyer (appraisal and second copies of the deeds ). , if you need them).
  • Maximum early repayment commissions: Fixed rate loan (2% of the amortized capital in the first ten years and 1.5% of the capital from the eleventh year).
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    amortized capital) and variable rate loans (0.25% of the amortized capital in the first three years and 0.15% of the amortized capital from the fourth year).

    • express prohibition of ground clauses
    • Ban on the connection of the mortgage with the other product subscription sold by the lender
    • That Change in the terms of the contract or bank is free of charge and without additional costs
    • Foreclosure Conditions. There are changes in the conditions for its exercise: during the first half of the agreed term, if non-payment of 12 installments has occurred or non-payment requires 3% of the existing debt; or during the second half of the agreed term if there is a non-payment of 15 installments or the non-payment accounts for 7% of the existing debt.
      • The lender must ensure this creditworthiness of the buyer by contacting the Bank of Spain Risk Information Center and other private credit information agencies.

        THE ADVICE OF EXPERTS

        Luis Noguera

        Agogado in Economis

        «Following the disappointing response of the Constitutional Court on the tax on documents in favor of financial institutions, the mortgage law reform is being wrapped up in a disguised cloak that will affect more than one citizen, but curiously without retroactive effect…

        This reform changes the content of some clauses claimed by the courts; such as extending from 3 to 12 unpaid installments for its execution; or the payment of the registration, agency, notary fees of the IAJD by the bank and now also by the rural banks and credit unions.

        The reform also grants more benefits to consumers by eliminating novation commissions and recourse costs and reducing early repayment commissions, among others.

        Ups and downs in this mortgage reform that fails to solve the courts’ next star problem: the link between credit and insurance.”

        Nuria Castillo Gala

        Lawyer specializing in banking procedural law in Tarinas

        “On June 16, the new Mortgage Law came into effect. These are the main innovations:

        1. Floor clauses are prohibited.
        2. The bank may charge an opening commission.
        3. The bank covers all mortgage costs, except for the appraisal.
        4. The mortgage contract is available to the customer at least 10 days before signing.
        5. The client must go to the notary at least 2 times before signing.
        6. The transition and novation of the loan are free.
        7. Before the execution of the customer, the non-payment of: in the first half of the loan: 3% of the total amount or 12 installments; in the second half of the loan: 7% of the total amount or 15 installments.
        8. The conclusion of other products together with the mortgage cannot be imposed on the customer.
        9. Banks have to check the creditworthiness of customers more strictly.
        10. Commissions for early amortization will be reduced».


          Johanna Bart

          Lawyer – JDA/SFAI practice area

          «The spirit is designed to protect the consumer, and therefore financial institutions are obliged to inform the customer about the terms and consequences of the loan through the Leaflet European standard (FEIN). That notary becomes the client’s advisor and a free consultation visit to the notary is arranged one day before signing. I know prohibits the floor clause, and no minimum interest rate can be specified for mortgage loans with variable interest rates. A the prepayment clause for non-payment and default interest clause, prepayment due to non-payment of installments is treated differently depending on whether it occurs in the first or second half of the mortgage loan term. A maximum default interest rate is set for mortgage loans on residential real estate, at which the default interest in the event of non-payment is three percentage points above the default interest. Finally, the costs associated with obtaining credit must be borne by the financial institution, with the exception of the home appraisal.