Mortgages

Mortgages and rising interest rates - what can you do about it?

SPN Mortgages 400x250One of the recurring themes these days is the rise in interest rates of the different central banks and the effects they are having on mortgages, both those already granted at a variable rate, and those that are to be granted.

How does the rise in rates affect you if the purchase of your home is financed at a variable rate?
When the Euribor increases at the time of reviewing the interest rate of the mortgage, whether biannually or annually, the interest to be paid on the loan will increase and, therefore, clients will have to pay more each month.

The Euribor is the interest rate at which the different banks in Europe lend money to each other, with an expiration usually of 12 months.

Variable mortgages in Spain closed the month of June with an average value of 0.852%, which meant the highest monthly and year-on-year increase in its history, in July the reference index rose to 0.961%, in August the monthly average was of 1,249%. How much does it affect the monthly fee?

If it is a variable rate mortgage of 120,000 euros over 20 years and with a differential of Euribor +1, the increase in the monthly mortgage payment is around 96 euros, which would mean 1,152 euros per year.

Can I change my mortgage conditions?
Yes, you can subrogate or transfer an existing loan to a new lender.

There are two ways to improve the mortgage conditions: you can renew your existing mortgage by renegotiating with your bank or refinancing your mortgage, by cancelling the previous one. Changing from a mortgage with variable interests to a mortgage with fixed interests would cost a 0,25% of the pending amount if the mortgage was established within the last 3 years and 0,15 % if it is was before said period.

Can the bank impose their linked products on the mortgage offer?
No, but they can offer bonuses for their products like home insurance, life insurance, pension plans, home alarm, credit cards, etc. If life insurance is requested by the bank, now the customer may present alternative policies to the entity without the interest increasing.

What documents does the bank provide?
The customer will receive the mortgage documentation at least ten days before signing in order to have enough time to read the contract and be able to resolve any doubts with the entity that may arise. This documentation must include:

The draft of the mortgage contract,
A simulation of the periodic instalments,
An overview showing costs associated to the mortgage deeds,.
Two standardised forms: the FEIN (a Standard Consumer Credit Information form) and the FIAE (a standardised warning form).

Who pays the mortgage expenses?
Notary, land registry, administration fees and stamp duty on the mortgage deeds are paid by the bank.
Appraisal is paid by the customer.

What about if I cannot pay my mortgage?
You should inform the bank as soon as possible in order to reach an agreement. The law will also further protect the mortgagee in the event of an embargo. Mortgages can be foreclosed in the first half of the contract period only after a non-payment of 12 mortgage installments or a non-paid amount of 3 % of the initial mortgage amount. In the second half of the term, they can only be executed after a non-payment of 15 months or a non-paid 7 % of the mortgage amount.

(News: Legal Advice – Mortgages)

  1 comment for “Mortgages

  1. warren
    October 25, 2022 at 4:42 pm

    There’s no way them keys fit that Casa . Maria

    Keep on smilin

    Warren

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