The entry into force of the new law 5/2019 that regulates since June of last year (2019) all mortgage-type credits (through a bank or through a private lender such as tzedakahhouse.org ) meant important changes regarding all operations before and during the time that the loan is active.
In this post we are going to review the consumer protection measures that the regulations have integrated into their text.
What measures introduces the mortgage law that favor consumers
Until last year it was common for each bank to independently set the negotiation and repayment conditions on their mortgage loans, and there may be notable differences from one entity to another.
In addition, this meant that the entities themselves could design special clauses without control, clauses that were often abusive to some extent. For these reasons, the mortgage loans were regulated so that the negotiation and start-up of the operation was homogeneous without prejudice to the entity with which it was contracted.
We are going to see the measures that the law introduces and that are beneficial for the consumer or borrower.
Commissions for early repayment are cut in half
If the loan is repaid early, right now the lender can only collect a maximum of:
- 2% commission on advanced capital in the case of early repayments (at fixed interest rates and for the first 10 years, then 1.5%)
- 0.25% for the first ten years and then 0.15% (for variable rate loans)
Previously, it was common for the lender to unilaterally set these commissions and for the client to have to renegotiate them (which rarely happened for non-expert clients). On average right now the commissions are half as high as before the entry into force of the law.
10 days of margin to evaluate the operation
The client must have 10 days to study the loan offer that the bank or private lender has presented. Said offer and all the documentation related to it must be sent to the client's notary and the client and the notary himself will be the ones to analyze, assess and comment on it. In this way they disappear:
- Commercial pressure from the bank to sign
- Firms without knowledge of the consequences of these operations
- Signatures in a hurry and / or without thoroughly reading the documentation
The consumer is not responsible for the costs of opening the mortgage or home loan
You will only have to pay the home appraisal costs out of pocket (more information in this post on how a home is appraised for a mortgage ). This appraisal is usually around € 200 for a property / premises of about 100 square meters in one of the large Spanish capitals. In more remote areas, prices may vary or be lower.
The bank or lender must therefore pay:
- Notary fees
- Property registration expenses
- The cost of agencies or tax advisers
Notary: FREE notarial intervention session (resolution of doubts) for the consumer
The law states that in addition to NOT taking charge of the notarial expenses and having 10 days to study the offer together with their notary, the client has the right to a free notarial intervention session to resolve their doubts regarding the loan offer received.
Test of judgment and understanding: final exam to be able to sign the loan deeds
In addition, before signing, and for both the notary and the bank to know that the client has the necessary knowledge and understands what it means to enter into an operation of this type, the signer must pass a judgment and understanding test: a test with questions related to your loan offer.
Standardized pre-contractual information in all cases
The format of the loan offer that the entity or lender presents to the client must always follow the same scheme and always contain the same documentation:
- FEIN tab or F icha E uropean I nformation N ormalizada: all details concerning the loan as duration, APR ... amounts described in clear and understandable
- FIAE tab or F icha and I nformation E standarizada WARNINGS: all special clauses and fees to be charged in the event of default, prepayment, renegotiation of the terms ...
- The contract model
- The proposed amortization table
In this way the client is clearer and better understands the offer and the special clauses under which it works.