A Guide to Not Getting Lost Taking Out a Mortgage
After the drastic halt due to the crisis, it seems that the banks have reopened the mortgage tap. Once the house has been chosen, you have to think about the mortgage loan, if you are not lucky enough to have the full purchase price of the property. In reclamador.es we are aware of the many terms and conditions to take into account when signing a mortgage, from the differential, through the amount that the bank will lend to the detection of possible abusive clauses contained in the loan contract.
To sign a mortgage with the best possible guarantees, we have prepared this guide.
- Steps when signing a mortgage
- After signing the deed before a notary
- Beware of unfair terms
Steps in signing a mortgage
Compare, the offer is very wide
Ask several banks about your need to access a mortgage loan in order to purchase a property. Also consult the online mortgage offer. Keep in mind that this type of loan is granted for a long period of time, so you will have to do numbers and define which offer is the most advisable. For it, think not only the differential of the mortgage, also if you will sign this one to fixed rate, variable or mixed. The APR of the loan is fundamental and little is said about it.
Don’t forget about the links, such as life insurance, home insurance, etc., that some banks oblige you to sign to grant the loan or for the differential to be lower.
Every time you go to a bank requesting information about a mortgage loan, it will give you the FIPRE (pre-contractual information sheet). With this document, you will be able to compare the offers, links and percentages applied by each bank.
You should pay attention to:
- Interest rate, benchmark index, Annual Percentage Rate (APR)..
- Term and repayment system, number of installments…
- Opening, amortisation and early cancellation fees, etc.
- Linkages (life insurance, home insurance, pension plans, etc.)
In short, do the math and ask for at least three proposals in different banks.
Once the bank has been chosen, go back to the branch to start the process.
With all the information gathered, you must go back to the bank with all the documentation you are asked to do the economic feasibility study of the operation.
The documentation that the bank will request in order to proceed with the study is the following if you are an employee:
- NIF /NIE
- Employment contract
- Last 3 payrolls
- Receipts for other loans, if any
- Working life report
- Last tax return
If you are self-employed, the bank will apply as a general rule:
- The annual VAT return
- Quarterly VAT payment
- IRPF Statement
- Last receipts of the payment to the Social Security
In addition to this information, banks often request it:
- The deposit contract
- Simple note of the property to be acquired
- Simple contracts or notes from other properties
- If you have so far lived on rent, it is quite possible that the bank will ask you to sign this lease.
With all this, in the course of a few weeks, the bank will study the viability of the operation and if it approves it will inform you that the operation has been accepted. This is where the procedures for going to the notary and signing the loan will begin.
To carry out the appraisal of the property
Once your financial capacity has been studied, if the bank gives the green light to the operation, the next most important step is the appraisal of the property.
The bank cannot force you to carry out the appraisal with a certain company. If you have an appraisal of the property carried out by an approved company for this purpose and this appraisal has not expired, the bank must accept this appraisal. This does not mean that the bank cannot carry out its own checks, but it does mean that the bank cannot carry out its own checks without charging you any amount.
Law 2/1981, of 25 March, on the regulation of the mortgage market in its Article 3 bis I states that “Credit institutions, including those with their own valuation services, shall be obliged to accept any valuation of a good contributed by the customer,
provided that, is certified by an approved appraiser in accordance with the provisions of this Law and has not expired in accordance with the legal provisions, without prejudice to the fact that the credit institution may carry out the checks it deems appropriate, from which in no case may its cost be passed on to the client who provides the certification”.
The binding offer
With all of the above, the bank will offer you a binding loan offer. This is an important document in which the financial conditions of the mortgage loan are set out.
It is essential that you study this document in detail and that you keep it throughout the life of the mortgage. In many occasions it serves as proof to claim.
Signature of the mortgage before a notary public
As with a property appraisal company, the notary is chosen by you, not the bank. If you have any doubts, you have three days to go to the notary’s office to read the deeds of the loan and ask any questions. All this without charging you anything.
After signing the deed before a notary
Once the deed to the mortgage loan is signed before a notary, there are still steps to take.
You must pay stamp duty within 30 days of signing at the notary’s office. When a house is bought and sold with a mortgage, the bank usually imposes an agency which, among other things, will be responsible for paying the obligatory taxes, in relation to the mortgage, we are talking about the IAJD.
It is not obligatory but it is totally recommendable to register the loan in the Land Registry. This is taken care of by the notary immediately after the signing of the mortgage, as online it sends an authorized copy to the Land Registry.
Beware of unfair terms
Despite the fact that in December 2015, the Supreme Court declared null and void for abusive the clause that imposed all the costs of formalization of the mortgage loan to the consumer, the truth is that today the vast majority of branches still impose this payment to the customer. Therefore, if you signed or are going to sign a mortgage in which you are forced to pay the expenses, you can claim. The same happens if your mortgage has a floor clause.
What costs of formalization of the mortgage can be claimed?
The most common mortgage formalization costs are:
- Land Registry