With the new mortgage law, it will become more advantageous for consumers to take out a Spanish mortgage. For instance, some fees will be eliminated and it will become easier to change a Spanish mortgage.
The new law is scheduled to come into force in March 2019. Therefore, this article will already describe the main points of the new law.
Cost of a Spanish mortgage
In the past, you could expect around 4% in extra charges on the amount borrowed. The stamp duty on the Spanish mortgage was then the biggest cost. However, the Spanish government decided that banks should pay this tax, but was unclear about the other costs.
For this reason, the new law creates clarity. Thus, from March 2018, consumers will only be responsible for the valuation costs of the property on which the mortgage will rest. Expect around 250 to 400 euros for this.
This will therefore be a significant saving for the borrower, this at the expense of the banks. Therefore, the question remains to what extent banks will (be able to) pass on these new costs to consumers.
No more minimum interest rate
In existing variable-rate mortgages, a clause setting a minimum interest rate was included. This prevents (older) loans from benefiting from low market interest rates. These types of clauses will be banned from March 2019. The interest rate will then be in line with the Euribor. That way, borrowing in Spain will be more interesting.
Lower severance payments
If you wish to terminate a mortgage early, for example because of a sale, you can do so provided you pay a severance fee. However, compared to Belgium, these break-up fees are already favourable.
Thanks to the Mortgage Act, there will be maximum percentages on early loan repayment. The rates range from 0.25% to 2% and depend on the term and type of loan. As a result, the break-up fees will be even lower.
Maximum compensation for contract changes
If you have a mortgage with a variable interest rate, you will be able to switch to a fixed rate more cheaply. The maximum fee for banks will be 0.15% on the loan.
So-called 'green mortgages' are something new. If you are going to borrow in Spain for an energy-efficient home, the bank will be exempt from stamp duty under certain conditions. This means you may be able to borrow more cheaply.
Borrowing in Spain: decision
In theory, a Spanish mortgage will become cheaper. Indeed, the new law stipulates that quasi all costs will be borne by the banks. In addition, the contract terms are also more favourable for consumers. However, the question remains to what extent the banks will pass on these costs. Therefore, it is important to compare the offers of different banks.
Do you have questions about borrowing in Spain? Together with our partners, Confianz can check without obligation which Spanish banks offer the cheapest mortgages and conditions.