Mortgages, what concepts and terms you should know

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. 

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. 

Credit intermediaries must be registered in a Registry indicated by the Real Estate Credit Law itself, in order to carry out credit intermediation activities.

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: 

1. FEIN (European standard information sheet), which will be considered a binding offer.
2. FIAE (Standardized warning sheet). The relevant clauses must be reported, such as those relating to the downward limitation of the variability of the interest rate (floor), the possibility of early maturity, the distribution of expenses or the risks of loans in foreign currency;
3. In the case of a variable interest rate loan, of a separate document with a special reference to the periodic payments to be paid by the borrower in different scenarios of interest rate evolution. 
4. Una project copy, which must reflect the content of the information expressed in points 1, 2 and 3 above.  
5. Document that breaks down the spending which correspond to the lender and which correspond to the borrower: 
   1. The property appraisal expenses will correspond to the borrower and the management expenses to the lender. 
   2. The lender will bear the costs of the notarial fees of the mortgage loan deed and those of the copies will be borne by the requestor. 
   3. The costs of inscription of the guarantees in the property registry will correspond to the lender. 
   4. The payment of the property transfer tax and documented legal acts will be made in accordance with the provisions of the applicable tax regulations.
6. If the Credit Institution requires the consumer to contract a policy of Guarantee Insurance for the fulfillment of the obligations of the contract, or to subscribe to a damage insurance with respect to the property that is the subject of the mortgage and the rest of the insurances provided for in the mortgage market regulations, must deliver the conditions of the guarantees in writing insurance that demands. 
7. When the loan is expected to be formalize by public deed, the borrower will be advised of the obligation to receive personalized and free advice from the Notary Public chosen by the debtor. 

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: 

1. FEIN (European standard information sheet), which will be considered a binding offer.
2. FIAE (Standardized warning sheet). The relevant clauses must be reported, such as those relating to the downward limitation of the variability of the interest rate (floor), the possibility of early maturity, the distribution of expenses or the risks of loans in foreign currency;
3. In the case of a variable interest rate loan, of a separate document with a special reference to the periodic payments to be paid by the borrower in different scenarios of interest rate evolution. 
4. Una project copy, which must reflect the content of the information expressed in points 1, 2 and 3 above.  
5. Document that breaks down the spending which correspond to the lender and which correspond to the borrower: 
   1. The property appraisal expenses will correspond to the borrower and the management expenses to the lender. 
   2. The lender will bear the costs of the notarial fees of the mortgage loan deed and those of the copies will be borne by the requestor. 
   3. The costs of inscription of the guarantees in the property registry will correspond to the lender. 
   4. The payment of the property transfer tax and documented legal acts will be made in accordance with the provisions of the applicable tax regulations.
6. If the Credit Institution requires the consumer to contract a policy of Guarantee Insurance for the fulfillment of the obligations of the contract, or to subscribe to a damage insurance with respect to the property that is the subject of the mortgage and the rest of the insurances provided for in the mortgage market regulations, must deliver the conditions of the guarantees in writing insurance that demands. 
7. When the loan is expected to be formalize by public deed, the borrower will be advised of the obligation to receive personalized and free advice from the Notary Public chosen by the debtor. 

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. 

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).

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. 

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. 

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. 

Early maturity occurs when concur jointly the following requirements: 

1. That the borrower is in default in the payment of a part of the principal or interest. 
2. That the amount of the overdue and unsatisfied installments equals at least:
   1. 1. If we meet within the first half of the loan: 

At 3% of the amount of the capital granted, or when the overdue and unsatisfied installments are equivalent to the non-payment of twelve monthly installments or a number of installments such that it supposes that the debtor has breached its obligation for a period equivalent to at least twelve months. 

1. 1. 2. If we meet within the second half of the loan duration: 

At 7% of the amount of the capital granted. This requirement will be considered fulfilled when the overdue and unsatisfied installments are equivalent to the non-payment of fifteen monthly installments or a number of installments such that it supposes that the debtor has breached its obligation for a period equivalent to at least fifteen months. 

3. That the lender has required the borrower to pay, granting him a period of at least one month for compliance and warning him that, if it is not attended, he will claim the full repayment owed on the loan. 

The counseling activity can be carried out by: 

1. The lender 
2. The real estate credit intermediary
3. Representatives appointed by any of the above positions
4. Persons who provide advisory services, provided that they are recognized by the competent authorities, and are subject to supervision of the requirements established by the Law. 

The aforementioned subjects must express in advance to the borrower, giving a negative or positive answer, if they can carry out the advisory service. In any case, they must inform in advance about: 

1. the set of products that will be taken into consideration regarding the consultation; Y
2. The cost  that such advice would entail and that they will bill the borrower. If the advice is free of charge, it should be indicated to the borrower.