MORTGAGE LOAN
There are two different and complementary elements:
A major loan agreement, by which a person or entity (the creditor, usually a bank or savings), pay a sum of money to another (the debtor).
The mortgage, which is the guarantee that the debtor, or another for him, provides the person providing the money. It is that a property (or more) is offered and fixed as a guarantee that it will repay the loan, so that if it is not returned within the agreed deadlines, the bank or savings could, with abbreviated procedures, sell at public auction the mortgaged property to collect what is owed, leaving the surplus to pay other creditors or, failing that, to the debtor.
By having the bank or savings guarantee a particularly effective, as is the mortgaged property, you can grant the loan with a longer term and a more advantageous interest on personal loans.
The property, except to proceed with the sale in case of default, remains the property of the debtor, who can sell it, rent it or re-mortgaging.
This is not the only form of security possible. Often, the financial institution requires that the mortgage bond is added, consisting of one or more people support the debtor and agrees to pay if it does not.
Universal responsibility: we must not forget that the loan debtor responds with all its assets, present and future, for the mortgage loan. If the sale of the mortgaged property structure does not cover the debt, the credit granted entity require the debtor to respond with any other goods that have or in the future may have.
Limited to the property mortgaged responsibility: However, today there are entities providing mortgage loans in which the debtor's liability is strictly limited to the mortgaged property, being released in the event of loan default, all other assets the debtor has or may have in the future.
1. Request for Loan
These are the steps you must follow a particular bank or savings to buy a home, which is the most typical course, but can be applied to any mortgage loan. They are general tips. Remember that should you have any doubts, go to a notary, as it will intervene in any mortgage and is the person who can give you an independent, impartial and free advice on any aspect of the mortgage loan.
Issues of interest:
1.1. How much ask: Keep in mind that, in addition to the costs of the purchase of housing, mortgage entails major costs: tax (between 0.75% and 1.5% depending on the region on the capital plus interest and costs requested), the origination fee charged by the bank (which can range between 0% and 1.5%); notary services, registration, management, appraisal, study, fire insurance and, sometimes, life insurance and other financial products. Therefore, we must have them and assess not just asking for the money we need to pay for the house, because then we will not have enough to meet all these expenses.
Note that credit institutions tend not to loan more than 80 percent of the value of housing, and often regard monthly installments should not exceed 35 or 40 percent of revenue applying for the loan.
1.2. Obtain information from various credit institutions by FIPRE (pre - contractual information sheet): Given the importance of the operation, it should not go only to our bank or a lifetime. You have to compare different offers, as competitive information can be used to negotiate even with our usual entity. Basic questions are:
-the commissions requiring the entity
-the interest rate to be applied: if it is fixed or variable and if it is variable, the reference rate (Euribor, IRPH ...); adding the differential to the benchmark (minimum applicable if the benchmark was "0") and linkages linking.
-the repayment period.
-the possible accessory obligations (debit accounts and receipts, and insurance related to the granting of the mortgage loan.
Basic information on a mortgage is achieved by a brochure called "card pre - contractual information" (FIPRE) entities, generally, they must provide, for free, to anyone who requests and provide information on loans mortgage that offer.
1.3. Apply for the loan and get the FIPER and Binding Offer: Once compared the FIPRE of individual banks, the customer will choose the entity whose loan seems best and request the "Listing Custom Information" (FIPER), which is more specific; a "suit" made to order, according to their financial situation and their need for financing. To make the FIPER, the credit institution will perform a free preliminary study of the feasibility of the operation and especially the customer 's ability to pay. If the customer is ability to pay will inform you of the need to make property appraisal and verifying the Land Registry the situation of the property charges. The expenses thus incurred are charged to the customer. If the appraisal covers 80 percent of the loan and registrar verification are not charges, the bank will provide the FIPER customer without charging more than the costs of pricing and registrar verification, so that it can meet the specific characteristics of the operation. This record shall include:
1. The paid-up capital
2. The repayment period: No. of shares, payment frequency, amount and date of payment, and the implications of writedowns.
3.The interest: initial nominal, the benchmark for subsequent reviews, the differential to be added to revised interest rate, the terms "floor" and "ceiling" with information such as maximum and minimum interest along with the fee maximum and minimum amortization, and an amortization table.
4. Commissions.
5. Other expenses: appraisal, notary, registration.
The FIPER should attach a document referred to regular pay against different scenarios of evolution of interest rates, with maximum, medium and minimum reference rates in the last fifteen years quota values. All this will allow you to assess implications and costs and make an informed decision about whether or not you are interested in signing the contract.
It is important to note that the characteristics of the loan contained in this custom tab do not entail any obligation for the entity. That is, it is not obliged to grant the loan or to respect the conditions set, if any targets alleged change in market conditions or in the property to be mortgaged, or customer conditions.
However, it is very different if the client requests the entity Binding Offer. In fact, it is recommended that the request because the conditions of the binding offer are immovable, and are to be identified in the deed. This binding offer will be facilitated by a FIPER in which additionally shall specify that it is a binding offer . His term of exceptions, be at least 14 calendar days.
2. Public deed before the notary
2.1 Election of the notary: Accepted binding offer documentation refers to a notary to prepare the deed. It is very important to know that the customer is entitled to choose the notary before whom wants to grant writing, although no prior documentation unless expressly stated. The customer must notify the bank or savings the notary who want to sign the mortgage.
2.2 Right to examine the deed of mortgage loan: You also have the right to examine the writing project (prepared by the notary according to the law) at the notary for 3 business days prior to the signing of the deed. This revision is highly recommended to correct any error or time difference with negotiated conditions.
If there were discrepancies between the binding offer and the financial content of the mortgage contract, the notary is obliged to inform you and you can withdraw from the transaction or require the entity to rectify the content of the contract.
In addition, if any unfair term, the notary must ask the bank to the deleted, provided that the Supreme Court has declared as such and is entered in the Register of General Conditions of Contract.
If you agree with the content of writing, the next step is to agree on a date to go to sign.
2.3 The granting of writing: not only sign before the notary. The debtor borrower may request to be left time to read the script and then the notary himself read and explained the content of the mortgage loan. The contract, which writes the notary according to the memorandum submitted by the bank, usually long, but it is important to pay the utmost attention, and make the notary all the questions that are desired.
Before signing, the notary consult online books Cadastre and Land Registry, as the application available to check that there is no loading or supervening limitation.
This is the last time to clarify any doubts you may have, because once signed writing, you will not be able to go back.
2.4 Who signs: The proxy or proxies of the bank; the / those receiving the loan; the / owners of
property that is mortgaged. Usually are the same person the owner and who receives the loan, but need not be so. It is possible that a person receives the loan and is another guarantee that give a property that belongs.
2.5 Deposit: Sometimes the bank may require that, in addition to the home warranty, a different person receiving the loan to pay bail. You need to be very careful with it because if the borrower defaults, the bank can ask the person who gave bail to return the outstanding loan in full and at once, without even having to show that the debtor has no assets to deal with the debt.
2.6 Documents stored: It is recommended that the client retains the simple copy of the deed of mortgage signed before the notary and successive installments payment documents to check that conform to the agreement. The customer will receive a single copy, along with the settlement of taxes and related expenses, normally the gestoría of the financial institution. You can also apply directly to the notary simple copy of the mortgage loan.
3. Registration Loan
For the mortgage becomes effective, it is necessary to enroll in the Registry of Property. To do so, immediately after the signing, the notary send via online to Land Registry notarial authorized electronic copy, which is a public document and has the same value as the paper copy.
It should also settle the Tax Stamp Duty. This tax varies in each region, and their amount is the result of applying a percentage (ranging from the 0.75% to 1.5%, according to the Autonomous Community) to the guaranteed amount (attention, not the capital loan, but everything secured by the mortgage, which is the capital, plus interest and costs, and as guidance, often approaching half double of the loan). Today you can pay this tax from the notice electronically, saving you time and travel.
4. Cancellation
It is a loan after the operation, the last act once it has been paid fully. When the loan is paid in full, the mortgage, which is the guarantee that the loan will be paid, no longer makes sense and is ineffective, but require formal act to certify that extinction in the registry, which is called cancellation.
It is necessary, therefore, a public deed before a notary, the mortgage cancellation, whose expenses shall be borne by the debtor, ie, which called for the mortgage or succeeded to it. At this writing it does not need to intervene the debtor, but the grant representatives of the bank or savings saying the debtor returned the principal of the loan with all interest and charges and requesting the property registrar to cancel the mortgage. Once notarized, writing cancel the registration, where you register, leaving the completely 'clean' property mortgage takes.
The cancellation of mortgage is tax exempt.
5. Main features of loans: Interest and APR
5.1. Interest: This is the price paid for the loan. The entity is not returned what was paid, but that amount plus a percentage of what is owed at all times. That percentage is the interest, and is the main benefit of the bank for lending money.
Interest may be fixed if it is agreed that will not change throughout the duration of the loan.
The so-called 'price of money', or interest varies in the market, so now it is very common that the mortgage interest is variable. If this is the case, it should examine the evolution of the reference rate chosen by the bank and the current value. Do not forget to add the reference rate differential often set the bank.
As important as the reference rate and the set differential for variable rate loans, is called "floor" which is the minimum interest rate on the loan, regardless of changes in the reference rate. We must always set whether or not, and if there is, know what it is, since it will prevent in many cases that our loan will benefit from lower interest rates.
It is also very common in variable rate loans an initial period (the first year or the first six months) in which the interest rate is fixed establishment (although you can also agree on an initial fixed rate for more than a year and then Variable for years or semesters). Keep in mind that very often that initial interest is less than that applied later, so that the first installments interest-from Fijo period will be lower than subsequent arising after the revision of the interest rate .
5.2 The APR: To compare different offers is especially important to look at the "Annual Percentage Rate" (APR), which is the rate actually paid taking into account the fees charged by the credit institution, and the manner and time in payments (by months, quarters, anticipated or not done: these different options make what you actually paid in a year varies on what would have paid taking into account only the nominal interest rate.
The APR is, shall we say, the 'real' interest on a loan, because it includes not only the nominal interest but other expenses, and how to return. To compare loan costs, rather than the nominal interest rate, look at the APR: if analyzing two loans, one of them has an APR higher than the other, it will be more expensive, although its nominal interest is lower.
If you want to know the actual type of the main references for mortgage loans access
to http://www.bde.es/clientebanca/productos/hipotecas/cuanto/cuanto.htm
6. How to repay the loan
6.1. Total Time: Number of years that will repay the loan. The longer the term, the more interest is paid and therefore pay more altogether.
6.2. Payment frequency: It is usually monthly in almost all cases.
6.3. Amount of fees: It is fundamental to know whether to cope with the loan.
If the interest rate is fixed for the duration of the loan: fees will be the same throughout the loan. The fixed-rate loans have the advantage that you can know from the outset the exact amount to be paid each month and the total paid at the end of the loan, although this type of loan interest, as a rule, is higher the variable.
If the interest rate is variable: there is also generally a period of fixed interest and a second phase of floating rate for the same time. In this second phase, a benchmark interest rate (Euribor, Public Debt, IRPH, etc.), to which is added a fixed point called differential. With him, it is the tax payable. Each review period (either a year or six months or a quarter), reapplied this interest rate, with the rise or fall that has experienced since the last time, adding the differential, which will become the new quota for the next period, which could be higher or lower than the previous period.
6.4. Possibility of early redemption: It is possible to advance loan amounts either to reduce it , either to completely pay before the agreed period. . Each of the entities set conditions this possibility
is important to consider several factors:
- The fees charged by the entity, for partial or total cancellation, particularly in the case of fixed interest, because the commission is usually higher.
- If there are minimum or maximum amount of prepayment.
- And if you allow, in case of partial advance, choose between reducing the number of years of the loan, or reduce the periodic fee or only support one of the two possibilities.
7. Fees
Are the amounts charged or entity may charge for various items. Among the most important commissions include:
7.1. Opening: It influences significantly on the actual cost of the loan. It is included to calculate the APR. It is a percentage that the bank charges on the loan, for once. The arrangement fee includes by law the so - called study commission on mortgage loans on housing (it is paid to the financial institution in respect of analysis and study of the feasibility of the operation), but may now be an independent concept opening commission.
7.2. Commission for early full or partial amortization: mortgages that were signed before December 9, 2007 are applied this commission when the owner makes the payment of part or all outstanding debt. Currently for variable rate mortgages these fees are usually between 0% and 0.50%.
7.3. Compensation for partial or total withdrawal: was created by Law 41/2007. This law
specifies that mortgages formalized from December 9, 2007, the revision of the interest rate is equal to or less than twelve months, which fall on housing and are in favor of a natural or legal person tribute the taxation of small sized company, when a partial repayment is made or the entire mortgage loan is canceled, will apply a maximum commission of 0.5% the first five years of the loan and 0.25% from the sixth year. So that this committee can go from 0% to the maximum limited by law. In addition, the entity is required to issue bank documents proving payment of the loan without charging any fee for it. In other cases, such as fixed - rate mortgage or whose interest is revisable more than one year, or fall on housing or not request a natural person or a legal person to pay tax on the tax treatment of small sized company, this commission has set a legal limit.
7.4 Compensation Commission for interest rate risk: A fee charged by the credit institution on mortgages with fixed interest or in mixed mortgages (with more than one year fixed rate period), or variable mortgages more than 12 months review, when the cancellation generates a capital loss to the entity. This commission can reach 5% of capital due.
7.5 Commission subrogation debtor is charged in the event that the mortgaged property is transferred, usually for sale, and is paid by the acquirer, which is subrogated to the mortgage, becomes the new debtor.
7.6. Commission modified conditions: planned change if any of the conditions initially agreed, especially the term or interest rate. This fee will vary depending on the entity and can go from 0% to about 2.50%. If the deadline is extended, the maximum by law the commission is 0.1% of the outstanding capital. In addition, the extension of term or capital increase, or when conditions of interest rate change, or financial conditions (repayment system) or personal guarantees, notary fees and registration are modified are lower . See novation and subrogation loans.
7.7. Commission creditor subrogation or change lending institution: scheduled for the event that the debtor during the life of the loan, decide to take it to another entity that offers better conditions. By Law 2/1994 this commission can be a maximum of 1% of the outstanding capital. However, if the creditor proves the existence of an economic damage that does not involve loss of earnings alone produced directly as a result of early repayment, you can claim the damage. The same claim by the creditor not prevent the conduct of subrogation, and will only lead to compensation be granted, at the time, the corresponding amount for the damage. From Law 41/2007, mortgages formalized from December 9, 2007 which review interest rate is equal to or less than twelve months, which fall on housing and are in favor of natural person or legal entity that pay tax on the tax treatment of small sized company, is applied at most a commission of 0.5% the first five years of the loan and 0.25% from the sixth year. So that, in these cases, this fee can range from 0% to a maximum limited by law.
7. 8 Commission claim unpaid installments: A fixed amount is charged each time the debtor is late in paying the mortgage payment in respect of the costs involved in the return of the receipt and recovery efforts of the unpaid fee. The commission charged varies depending on the financial institution and between 20 and 35 euros.
8. Other obligations of the borrower
The debtor in addition to paying dues, has some additional obligations which must also comply. We must formalize insurance on the mortgaged property, usually of damage and fires, although sometimes also require banks or life insurance. And of course the obligation to pay the annual insurance premium.
It must also be aware of the payment of IBI, the costs of community owners and, where appropriate, other taxes that may encumber the property such as urban.
9. Expenses Operation
orientation ratio of total expenses to be paid by the person requesting the loan:
9.1. Prior to the granting of the public deed: The financial institution must conduct an appraisal of the property or are intended mortgaging, by a specialized company.
It will request information to Land Registry to check for any charges that affect the operation and prevent other mortgages or embargos- basically.
The costs of these procedures are to be paid, if there have been, but ultimately will not come to grant the loan.
9.2. Expenses are paid when the deed is signed.
-Commission Opening (See 7.1 Commissions). -Tax Of Stamp Duty (See 3 Registration loans). -Notario: The deed of the mortgage loan. The bill depends on the request and is fixed in tariffs approved by Royal Decree. -Record Property: for the registration of the mortgage. As with notaries, the bill depends on the request, and tariffs are approved by Royal Decree. -Management Of scripture: Writing, once signed, is sent by the notary electronically to the registry, with maximum guarantees of security. In addition, you must pay tax Documented Legal Act and bring copy writing to the Land Registry. All this can be done already on line, from the notice itself, immediately after the signing of the deed. There is still ease of doing everything from the notice itself, these procedures used to perform the manager appointed by the credit institution. Should find out what the cost of this management, as rates can vary greatly. You should not accept that the bank will impose an agency to provide an abnormally expensive service.
It is important to keep in mind when making the calculations, these are the costs of the mortgage loan. If this is preceded by a sale, other expenses accrue.
10. Novation and Subrogation loan
Changes in the credit market in recent years make people who have contracted a mortgage loan with a credit institution may find that the interest paid is higher than average interest existing in the market. There is the option of negotiating with the financial institution a drop in the interest rate or, if not possible, move the loan to another entity that offers better conditions.
To facilitate these operations and reduce costs Law 2/1994, of 30 March, on subrogation and modification of mortgage loans, which distinguishes between two assumptions were issued:
10.1. Novation of the mortgage loan: It consists simply of an agreement with your bank or savings to expand or reduce capital, modify the term of agreement, the conditions of the interest rate initially agreed or current, the method or system of amortization and any other financial conditions of the loan. You can also agree on the provision or modification of personal guarantees.
It is a good solution because the costs are minimal. Both the notarial deed and registration costs are strongly reduced, and also in the case of modification of the term and that affects the interest no tax is due because the law states that this transaction is exempt from them. It is possible, however, that the entity collects a commission, which is usually called 'Commission for modification of the conditions "if it is agreed in the mortgage deed. (See 7. Fees)
10.2. Subrogation of mortgage: If you do not get the desired improvement by the entity that you initially granted the loan may be possible to transfer it to another entity, running out of the bank or he who originally gave you. It is what is called subrogation lending institution.
The procedure is basically going to the entity that offers better conditions, which shall issue a binding offer. This offer must contain the new conditions offered, and the new entity may not charge fees or expenses after that have not been agreed on the offer. Then the new financial institution notified through a notary public offer to the former entity, which may issue, within 7 calendar days, a certificate stating what the exact amount owed, even if the entity is not legally obliged to issue this certification.
Given certification for the next 15 calendar days from the notification, the creditor can assume the conditions of interest offered by the other entity, ie, can match the offer of the new entity, which will be revealed before the same notary who made the notification, which would not pursue surrogacy. To this end, within 10 working days, you must transfer the debtor binding offer equaling or improving the conditions of the other entity.
If the original entity does not issue the certification within 7 days, or, if the issue does not prevent surrogacy within 15 days as set out above, it proceeds to the granting of the public deed of subrogation. By this writing, the new entity takes the place of the previous entity, which is transferred the amount of the debt, and is subrogated to the existing mortgage loan, respecting the above, unless conditions with regard to the new conditions interest rate, duration, or both.
10.3. The cost of the operation is determined mainly by bank commissions, because, as in the novation, both tariffs writing as registration are on sale (Notary fees are those for documents without amount, and the registry are in account the number of outstanding principal with a reduction of 90%), and do not pay taxes.
There will be paid first to the former entity the appropriate amount as commission for cancellation or change lending institution. This fee is calculated on the outstanding balance at the time of subrogation capital and proceeds only if expressly agreed in writing has mortgage (See 7. Fees)
If the existing interest rate is fixed there is no legal limitation. So it is advisable to consult the commission established for this course, which will pick up the articles of incorporation of the mortgage loan.
The new entity will also, perhaps, to pay an arrangement fee that is totally free and is determined by negotiation with the client. It is a fact to be taken into account when evaluating whether the cost of the operation is offset by the reduction of interest.
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