The mortgage dictionary is a section of the website that allows you to know in detail the definition of all the terms related to the contracting of a mortgage or mortgage product, one of the financial operations that must be thought about and analyzed the most because it involves a significant debt that will be paid over several years. The Notary Bosch-Bages of Barcelona wants with this page to facilitate the knowledge of the most important concepts related to this type of Notarial services related to mortgages.
Mortgage Dictionary
-Everyone- Mortgage (25) Law (26) Mortgage Law (2)Contingent commitment or guarantee - Loan contract - Shared equity loan agreement - Credit institution - Group - Real estate credit intermediary: - Linked Credit Intermediary: - Obligation to assess the solvency of the potential borrower - Role of the Registry in Real Estate Credit Contracts - Combination selling practices - Real estate lender - Bridging loan - Borrower - Legal regime of real estate credit intermediaries - Formal transparency - Formal transparency - Material transparency - What is contractual information? - What is interest for late payment? - What is early repayment? - What is the APR? - What is Early Expiration? - What is real estate appraisal? - What information can the bank request to assess the creditworthiness of the potential borrower? - What are tied sales? - Who is required to advise on loans? - Are the rights that the Law gives to the mortgage debtor waivable? -
Contingent commitment or guaranteeAs provided by the Real Estate Credit Law, it is a “loan contract that serves as a guarantee or guarantee to carry out other independent legal operations but ancillary to the other, in which the capital guaranteed by the real estate can only be used in the event of a or various contingencies specified in the contract ”. Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
Loan contractContract by which the lender grants a loan that the borrower is obliged to return within a specified period, with interest agreed between the parties. Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
Shared equity loan agreementA loan contract in which the capital to be repaid is determined by a percentage, established in the contract, of the value of the real estate at the time of repayment or repayments of the capital. Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
Credit institutionCompany that is dedicated as a typical and habitual activity to the granting of credits to third parties, to be restored within a specified period. Credit institution is understood as the Official Credit Institute, banks, savings banks, the Spanish Confederation of Savings Banks, credit cooperatives, financial credit institutions and electronic money institutions. Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
GroupGroup of lenders, each one forming a different mercantile company, but united by the same parent companies and guided by a parent company, obliged to present consolidated annual accounts. Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
Real estate credit intermediary:It is the natural or legal person who, without acting as a lender and in exchange for remuneration: 1) offers credit contracts; 2nd) assists consumers in the procedures prior to the contract; or 3) enter into credit agreements on behalf of the lender. Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
Linked Credit Intermediary:Any credit intermediary acting in the name and under the full responsibility of: a single lender; a single group; or a number of lenders or groups that do not represent the majority of the market. Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
Obligation to assess the solvency of the potential borrowerProspects or probabilities that the debtor has of being able to face the debt contracted with the financial institution. ...As provided in article 12 of the Real Estate Credits Law, it obliges the lender in the pre-contractual sentence (phase in which the contract is agreed not yet entered into and not binding) to clearly and directly specify the necessary information that must be provided by the borrower in order to evaluate the solvency of the debtor party.
The debtor must provide the information within a period indicated by the creditor party, and this must be proportional and not exceed the limits necessary to proceed with the correct evaluation. Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
Role of the Registry in Real Estate Credit ContractsThe activity of granting loans may be executed by real estate lenders when they are legally registered in the corresponding Registry, as long as they meet the requirements of article 28 of the Real Estate Credit Law: Article 28: “Registry management. 1. The management of the registry will be assumed by the Bank of Spain or by the competent body of each Autonomous Community […]. 2. The Bank of Spain will be responsible for managing the registration of: a) real estate credit intermediaries that operate or will operate with borrowers with addresses located throughout the State; b) Real estate credit intermediaries that are going to operate in Spain through a branch or under the free provision of services regime. "...Instead, registration is not necessary to the Registry for the management of these activities when carried out by a credit institution, a financial credit institution or a branch in Spain from a credit institution. Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
Combination selling practicesAs provided by the Real Estate Credit Law, “any offer or sale of a package consisting of a loan contract and other differentiated financial products or services, in particular another loan without a mortgage guarantee, when the loan contract is also offered to the borrower for separated". Law, Mortgage |
Real estate lenderNatural or legal person that in a professional way, carries out the activity of granting loans with a mortgage guarantee or other real right of guarantee on a property for residential use, or with the purpose of acquiring or conserving property rights over land or real estate built or to be built . Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
Bridging loanAs described by the Real Estate Credit Law, it is a special loan to cover an immediate need for financing. So it is a temporary benefit that is processed quickly that serves as a “bridge” to later have a new, larger long-term loan (more than a year). Therefore, it is a “loan agreement without a fixed duration or repayable within a period of 12 months, used by the borrower as a temporary financing solution during the transition period to another financing modality for the real estate. Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
BorrowerThe natural person who acts as a debtor of a loan whose mortgage guarantee is a real estate for residential use or whose purpose is the acquisition or conservation of land or buildings built or to be built. Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
Legal regime of real estate credit intermediariesReal estate credit intermediaries, their designated representatives and real estate lenders shall be governed by the following regulatory regime: a) This Law and the provisions that develop it. b) The provisions that, where appropriate, may be approved by the Autonomous Communities in the exercise of the powers attributed to them in the matter, which must respect in any case the provisions established in the rules referred to in the previous letter. c) On a supplementary basis, and in the event that the borrower is a consumer, Law 2/2009, of March 31, which regulates the contracting with consumers of loans or mortgage credits and intermediation services for the conclusion of loan or credit contracts....Credit intermediaries must be registered in a Registry indicated by the Real Estate Credit Law itself, in order to carry out credit intermediation activities. Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
Formal transparencyWith the new regulations on mortgage matters, Law 5/2019 of March 15 regulating real estate credit contracts, which is the transposition of Directive 2014/17 / EU of the European Parliament and of the Council, of February 4, 2014 , it is intended to increase the protection of the debtor through the "formal and material transparency" of the contract. ...According to the jurisprudence of the Supreme Court and the CJEU, the creditor's duty of transparency implies that the consumer has "before the conclusion of the contract" understandable information about the contracted conditions and the consequences of said clauses in the execution of the contract. Formal transparency can be found stipulated in the Article 14 of the Real Estate Credit Law. Establishes a list of documents that the lender must deliver to the borrower with a minimum 10 days notice regarding the signing of the contract.
This documentation consists of:
Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
Formal transparencyWith the new regulations on mortgage matters, Law 5/2019 of March 15 regulating real estate credit contracts, which is the transposition of Directive 2014/17 / EU of the European Parliament and of the Council, of February 4, 2014 , it is intended to increase the protection of the debtor through the "formal and material transparency" of the contract. ...According to the jurisprudence of the Supreme Court and the CJEU, the creditor's duty of transparency implies that the consumer has "before the conclusion of the contract" understandable information about the contracted conditions and the consequences of said clauses in the execution of the contract. Formal transparency can be found stipulated in the Article 14 of the Real Estate Credit Law. Establishes a list of documents that the lender must deliver to the borrower with a minimum 10 days notice regarding the signing of the contract.
This documentation consists of:
Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
Material transparencyThe most relevant novelty proposed by the Law on loans with mortgage guarantee is that, for the first time, the debtor, before entering into the loan contract, will receive free advice from a Notary Public (chosen by the Consumer), whose informative notarial act will not be present. the lender, the intermediary of the credit institution or its representative. It is a notarial act only with the present parties of the consumer and the Notary, making the information effective, and producing greater freedom for the debtor to express their controversies or request certain consultations and opinions. ...In the Notarial Act, the notary will verify the receipt by the debtor of the supporting documents in article 14 of the Law, and that these have been delivered within the legally established period, and must inform individually about the particular circumstances of the offer of loan.
Finally, the parties will carry out a test issued by the Notary, by which it will be proven that the parties have been informed and that they understand the content of the offer. Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
What is contractual information?Within a minimum period of ten business days before the parties are bound to the real estate loan contract, the lender, credit intermediary or their designated representative is obliged to offer pre-contractual information or preliminary deals before the conclusion of the contract. ...The seller has the duty to inform about the characteristics of the binding offer, clearly and expressly, without giving rise to error or vice, and to offer personalized information to the consumer that allows him to correctly evaluate the offer, from a need perspective. personal consumer regarding their needs, preferences, financial situation ... Whose data will be reflected through the European Standard Information Sheet (FEIN). Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
What is interest for late payment?Interest based on the delay in payment of the agreed fee, which are added together with the remunerative interest. ...Article 25 of the Real Estate Credit Law establishes that the loan conceived to a natural person and that is guaranteed by a mortgage guarantee, the default interest will be the remunerative interest plus 3 points percentage throughout the period in which it is required. Interest on late payment only may accrue on the principal due and pending payment and may not be capitalized in any case.
This regulation is mandatory, that is, it is mandatory and there is no agreement between the parties on the content of the default interest. Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
What is early repayment?At any time, the debtor (borrower) may decide to fully or partially repay the outstanding capital. The parties may agree on a period of prior communication that may not exceed one month. ...When the borrower expresses his willingness to repay early, the lender will have three business days to claim the borrower the delivery of information to carry out the valuation of this operation.
The financial loss suffered by the lender will be calculated, proportionally to the repaid capital, as a negative difference between the outstanding capital at the time of the early repayment and the present market value of the loan. Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
What is the APR?As provided by the Law, it understands the Annual Equivalent Rate (APR) as “the total cost of the loan for the borrower, expressed as an annual percentage of the total amount of the loan granted, plus the associated costs, if applicable, and correspondingly, on a annual basis, at the present value of all future or existing commitments, such as provisions of funds, reimbursements and expenses, agreed by the lender and the borrower ”. ...How is it calculated?It is calculated by means of a mathematical operation, which expresses the nominal interest rate, the commissions, and the term of the operation. It is expressed as a percentage and indicates the “cost” of the mortgage, with the utility of comparing the different mortgage credit offers available at financial institutions.Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
What is Early Expiration?In real estate credit contracts granted to individuals, the repayment of the loan will be guaranteed by the mortgaged asset. This may be withdrawn from the property of the debtor, being seized by the creditor, when the situation of early expiration occurs. ...Early maturity occurs when concur jointly the following requirements:
Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
What is real estate appraisal?The real estate or certain rights susceptible for financial purposes, which will include the mortgage guarantee of the real estate credit loan, will be evaluated before the conclusion of the contract by appraisal companies, appraisal services or credit institutions, through recognized and reliable appraisal standards , in order to prove the real value of the property. Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
What information can the bank request to assess the creditworthiness of the potential borrower?The solvency assessment will not be based on the value of the guarantee (except for cases in which the loan is for the construction or renovation of residential properties), but rather to analyze the economic capacity of the borrower, the lender must Take into account: -Recurring expenses -Employment -Debts or financial commitments -Income -Savings -Own assets -Predictable income from collection after retirement, among others. Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
What are tied sales?Set of accessory products to the real estate loan that the bank requires to contract or makes available to the consumer or debtor, in order to contract the real estate loan with a mortgage guarantee. For example, some offers of credit, require to contract together with the real estate loan, a checking account or an Insurance in the corresponding Bank. Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
Who is required to advise on loans?It is an obligation that the lender, credit intermediary or designated representative carry out the informative activity of informing the borrower about the offer of the real estate loan before the conclusion of the contract, but there is no obligation to provide additional advisory services to the obligors. legally. ...The counseling activity can be carried out by:
Consult BOE Law 5/2019, of March 15, regulating real estate credit contracts |
Are the rights that the Law gives to the mortgage debtor waivable?The legal provisions contained in Law 5/2019 of March, on real estate credit contracts, and the development regulations, are mandatory in all their parts, not being susceptible of not applying any of its mandatory regulations, leaving the parties linked to Comply with the provisions of the Law, except for those contemplated as operative norms (norms that the Law allows to waive or agree between the parties) By not respecting the imperative nature of the norm, the acts carried out in fraud will be null and void. BOE - Law 2/2006, of June 14, of Civil Law of Galicia |
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