If you are going to buy a property in Spain, and need a mortgage loan, you should be careful about certain expenses and commissions which are not always explained correctly by Spanish banks.
According to current regulations, the bank must inform you beforehand about the economic conditions, characteristics same, expenses, etc of the mortgage loan to be signed, and before going to the notary office to sign the public deed of mortgage loan. Sometimes banks make clients sign at the notary office, a document with an earlier date, indicating that the clients have been informed in sufficient time.
It is very important to carefully review the conditions of the mortgage loan before going to the notary office, as well as the actual mortgage loan deed to be signed at the notary.
Among other issues, you must take into account the following:
– House insurance: although not mandatory, it is very common for banks to condition that the property to be insured when granting the loan, to prevent the bank from losing its guarantee if the property is damaged. But even if the bank requires you to take out damage insurance, you cannot be forced to contract the policy with the bank itself, and you can choose the insurer you deem appropriate.
.-Life insurance is not obligatory: we have been able to verify that some banks tell their clients that to obtain a mortgage loan in Spain it is obligatory to take out a life insurance policy. This is not true, and if the bank forces you to do so, you should know that you can refuse it, or cancel the policy (although it will have to be done immediately after contracting it).
– Opening, maintenance and mailing commissions: Some banks explain to their customers the general conditions of the loan, i.e: the amount, the initial interest rate, but they forget to inform adequately about other commissions they charge: arrangement or opening commission (for the granting the loan), a post or mail commission (for sending the monthly loan receipts), study commission, etc.
– Costs for the formalization of the loan.
Some banks continue to indicate in their mortgage loan deeds that all the expenses for the loan and its formalization: notary, registry, taxes, valuation, registration process, , etc. must be paid by the consumers, and all this, even though the Supreme Court of Spain, in its ruling of 23/12/2015, declared as abusive such clauses and therefore null and void those which impose all the expenses on the consumers, ,.
We have even come to see banks charge for the registration process of the mortgage deeds at the Land Registry, up to 2 and 5 times more than the normal fees for such services.
Therefore, before agreeing a loan with a bank, you must ask them to confirm in detail all expenses, commissions, conditions that will exist and who will face them, from the beginning of the process, and the registration of the mortgage deed at the land registry.
If you, or someone you know is in this situation, contact us and we will help you.
The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.
Carlos Baos (Lawyer)
White & Baos
Tel:+34 966 426 185
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