In this article we are going to explain what is the Deed of Mortgage Loan, one of the most common services provided by a notary related to real estate. It is a document that is signed before a notary and that must contain all the information referring to the applicant, the conditions of the loan and other information that we will see below.

Mortgage Loan Deed Definition

It is a document that contains the data of the mortgage loan applicant, the conditions and responsibilities. The signature is made before a notary, the applicant and the representative of the financial institution.

This document contains the conditions and clauses that have been agreed between the debtor and creditor of a credit or mortgage loan. It is considered an official document that to be recognized by third parties must be registered in the Property Registry.

Mortgage loans are usually the solution to our problems, when we find ourselves in a delicate financial situation. A quick alternative that is usually simple, allowing us to request the necessary money to buy a property in our name or renovate our apartment. When a loan of this nature is signed, it is important to know what documents we need and the papers that we must sign.

Mortgage loan

The mortgage loan is a financial instrument used by banking institutions to lend money. For this purpose, banks require a real guarantee of a property that, in the event of non-payment and after legal proceedings, can keep the property that will serve as a form of payment for the loan, either totally or partially.

This financial product gives us money in exchange for our personal commitment to repay the amount borrowed. Amount that must be returned through periodic payments, with the corresponding interest, using a property as a guarantee of payment.

The mortgage guarantee loan allows your apartment, premises, house or any other type of property to be converted into money. To apply for a mortgage loan, we must meet a series of requirements. In addition to presenting various documents and complying with the indicated procedure.

Differences between the mortgage loan and mortgage loan

Mortgage loan

When we want to access our own home, but we do not have the necessary funds to assume said expense, the most common solution is to request a mortgage loan. This consists of obtaining a loan to buy a property using it as collateral in case of default. At the time of buying the property, the bank is the one that deposits the money to the seller.

That is to say that the person who buys the house, apartment or premises does not intervene directly in the transaction. Once the operation is completed, the mortgage loan installment payment regime begins to apply, together with the previously stipulated interest.

To request it, we will have to sign both the deed of the house, and a deed between both parties: the creditor of the loan and the entity that grants the money. In this way, both the company and the borrower have a contract where the requirements to be met are provided.

Home Equity Loan

On the other hand, we have home equity loans. These are credits that allow us to exchange our property for cash. When the need arises to face debts, liquidity problems, or you simply want to pay something without affecting your personal finances or your savings, these loans are the best option.

It consists of accessing a money loan using a property in your name as collateral, without a mortgage or with a low charge. The money obtained from these loans is deposited directly into your bank account and can be used for whatever you want. The maximum amount to obtain will be limited by the value of the property that you present as collateral, since a maximum of 30% of the appraised value of the property is offered.

Finally comment that the interest rate is defined by the chosen payment terms and the total amount of the loan. When a mortgage guarantee loan is requested, the deed of the property must be presented, since fundamental data will be obtained from it to use that property as collateral.

When applying for a mortgage guarantee loan, a contract will also be signed between the creditor and the financial institution that grants the loan. The contract will detail all the requirements and obligations of both parties from the moment of obtaining and granting the pre-established sum of money.

Sample Mortgage Deed

As we have previously mentioned, to access a mortgage loan or mortgage guarantee loan in Spain it is necessary to sign a contract or deed between the financial institution that grants it and the applicant. This is a document that is signed in front of a notary and that must contain all the data referring to the applicant, the conditions of the loan and the responsibilities of both the applicant and the financial institution.

The deed of the loan will determine the details of the property that is delivered as collateral:

• Description of the farm
• if you have a mortgage
• If it is the habitual residence, commercial premises, etc.
• the IBI
• Community fees

On the other hand, the applicant's data is included:

• Full name and ID.
• Loan amount: Must be detailed within the loan
• Return conditions
• Applicable interest rate

Within the deed of a mortgage loan, it is necessary to define all the necessary data and conditions so that the creditor is always aware of his responsibilities and rights. In this document we will be informed of the costs of writing a mortgage loan, repayment terms, interest for non-payment...

Requirements to apply for a mortgage loan

Financial entities establish some requirements that are essential for applying for a mortgage loan:

• The applicant must be between the ages of 18 and 75.
• Income or the type of employment contract that the applicant has.
• Verification by the bank that the borrower is not on an official list of defaulters. Banking institutions can reject the application if you are on one of these lists because they consider that you have a risk profile.

The documents to present are the following:

• National identity document.
• Tax Identification Number (NIF).
• Periodic and annual VAT payments, in case of being self-employed.
• Last payroll payments.
• Laboral life.
• Last statement of assets and income.
• Payment receipts for other loans, if you have them.
• Evidence justifying the level of income, annual bonuses and extra payments.
• Justification of the periods in which you have been without work or when you have changed companies.

With all this information, the bank will be able to determine whether or not we have a risk profile and what will be the conditions that our loan will have.

Essential data

The data needed in the mortgage loan deed are the following:

• Amount of money: The deed and the contract must include the amount that the borrower will receive, the method of delivery of the same and, if done through a bank transaction, the account information.
  Loan repayment term and amortizations: In addition, the writing must reflect the stipulated time to return the money to the lending company, if it will be done in installments and how the amortization will be carried out. Also in this section it should be verified if there are possibilities of repaying the loan in advance and what are the requirements to do so.
  Interests: Vitally important. is to define whether the interests will be fixed or variable. In the case of being fixed, the percentage must be recorded and how it will be reflected in each installment. In the event that they are variable, it will have to be stipulated how it will be carried out, in which installments it will vary and what is the criteria to do it in this way, generally based on the Euribor variation. In addition, it must specify how to proceed in the case of late payment of installments.
  Commissions: If the company charges commissions, they must be set in the deed and the contract and they must be specified either by concessions, extra procedures or the study of the loan.
  Miscellaneous expenses: They could be notary fees, lawyers if needed, the appraisal of the property, the records in the Treasury and the Property Registry, among other various expenses associated with the loan.
  Advance resolution: The contract must include the possible causes for which it can be terminated. Some examples are: arrears in the payment of fees, non-compliance with obligations, problems with documentation, among others.

Types of mortgage loans

There are several types of mortgage loans:

• Normal or in currency: This type of mortgage loan depends on the type of currency with which it is paid or the type of installment.
• Fixed, mixed or variable: The mortgage loan of this type depends on the type of interest you have. When the mortgage loan has a fixed interest rate, a fee established by the bank is paid. This fee will always be the same. The mortgage loan with a mixed interest, during the first years will have a fixed interest rate. After this period of time, variable interest will be applied taking the Euribor as a reference. Mortgage loans with a variable interest reference index that is taken is the Euribor. This varies daily, although in general the interest rate of the loan is updated every 6 months and the value of the Euribor at that time is taken.

Procedure for signing the mortgage loan deed

When a mortgage loan deed is presented to the notary, before signing, he consults the Cadastre and the Property Registry. This query is used to verify that there is no type of limitation or load and will inform about it.

It is the opportunity we have to clarify all doubts, since, after the signing of the deed, nothing can be done. After clarifying the doubts, the notary verifies that the entire procedure is legal and proceeds to the signature.

The signature is made by the lender who can be a representative or proxy of the financial institution. The borrowers who are the people who receive the loan who are generally the owners of the property that is mortgaged.

There is also the possibility that one person receives the loan and another is the one who gives a property that he owns as collateral. This person is called a mortgage guarantor, because he gives his property as a guarantee for the payment of the loan by the borrower.

The guarantor constitutes the mortgage on his property, which he can lose in case the borrower does not repay the loan.

On some occasions, the bank may require a deposit in addition to the guarantee of the property. The security is provided by a person other than the one receiving the loan. This person, in the event that the borrower does not repay the loan, will have to assume the total and immediate repayment of the amount owed.

When the mortgage loan deed is signed, it is advisable to keep the simple copy signed before the notary. Like the installment payment documents, which will be very useful to demonstrate that they comply with what was agreed.

The simple copy will be delivered to the borrower on the day of signing or will be sent electronically. This procedure will have no cost. Although it is necessary that the borrower's email address be found in the writing.

Obtaining the deeds of the mortgage loan

A basic document to be able to claim the abuses of banks with mortgage loans are the mortgage deeds. This document, signed before a notary, reflects, among others, the expenses assumed by each party to formalize the mortgage or, for example, if the mortgage loan has a floor and a ceiling. That is, if it has the famous floor clause.

If you are claiming your floor clause, multi-currency mortgage or your mortgage expenses or you are considering claiming your bank for one or more of these reasons, you will have to provide the deeds of your mortgage loan.

When we sign a mortgage to buy a home, we are going to sign several deeds. Fundamentally:

• The deed of sale of the property
• The mortgage loan.

Mortgage loan deeds can be obtained in several different ways:

• Written request with acknowledgment of receipt to our bank. The bank has two months to respond to us.
• If the bank refuses to do it or we want to do it in a shorter period of time, we can request it from the notary. We have to request a simple copy at the notary where we signed the loan. Copy that as we have said before will have an extra cost.
• If we have a subrogation because we bought the property from a promoter, we can also request said deed from the promoter.
• If we have had novations, we must consult if it is necessary to contribute all of them and how to obtain them.

copy request

When the application for a mortgage loan is made in a financial institution in Spain, a copy is delivered at the time of signing. The original of the deed will remain in the Notary where the procedure was carried out and the loan applicant as well as the financial institution will be given a copy of the deed.

To request another copy for any circumstance, it must be done before the Notary where the procedure was carried out, which will have an extra cost. However, the easiest and fastest way to obtain a simple copy is through the banking institution where you applied for the loan.

The other alternative to request a copy of the deed is through the web portal of the General Council of Notaries or through the Notarial Association. In any of these organizations they will give you the information you require and to find the notary where the document is located.

Although the process to apply for a mortgage guarantee loan is simple, it is essential that the applicant is aware of the documents that will be signed and the conditions of the loan.

Registration of the mortgage loan deed

For the deed of the mortgage loan to be valid before third parties, it is necessary to register it in the property registry. The Notary will do this immediately after signing, for this he will send the notarial authorized electronic copy online to the registry.

The notarial authorized electronic copy is a public document, which has the same value as a paper copy. When the property registry carries out the registration, it will issue a literal simple note of the registration, the dispatch note and the qualification.

In the event that unregistered clauses are issued, the property registry will indicate the reason for the refusal or suspension. For both cases, the property registry will send the borrower a literal simple note of the free registration via email.

For any query related to the Mortgage Deed in Bosch-Bages Barcelona notary we can advise you.